Agreements - guiding principles

Agreements are formal instruments that define the terms and conditions governing the relationship between two or more parties. They typically specify the scope of services to be delivered, delineate the responsibilities of each party, and outline the associated compensation arrangements.

The Institute provides standard agreements that architects may adopt when engaging clients or consultants. However, it is not uncommon for clients to propose their own contractual terms. In such cases, it is essential that these documents be carefully reviewed to ensure alignment with professional standards and legal obligations.

This guidance note outlines key principles, recommended practices, and unacceptable provisions that architects should consider when evaluating proposed Agreements. It is intended to support informed decision-making and promote contractual arrangements that are fair, transparent, and conducive to successful project outcomes.

Page contents:

• Client and Architect Agreement
• Architect and Consultant Agreement
• Agreement best practice
• Unacceptable requirements
• Clarifying design intent
• Guiding principles for balanced and insurable client architect agreements

Client and Architect Agreement 

‘A Client Architect Agreement (CAA) is the formal agreement between the client and the architect. It may also be known as a Client Agreement, Letter of Engagement, Fee Letter or Consultancy Agreement. This generally includes details of the parties to the agreement, the project brief, stages of architectural services being offered, construction budget, the selected project procurement process, program, costs for the phases of service offered, and other secondary or sub-consultants that may be required to assist in undertaking the services, and assumptions and exclusions. 

The agreement also stipulates the obligations of both parties under the agreement, including compliance with the relevant code of conduct, and other terms and conditions, such as dealings with copyright and moral rights, variations to services, and termination. Specific requirements differ across states and territories. Refer to the relevant Architects Act, regulation and/or code of professional conduct.’ 2021 NSCA Explanatory Notes and definitions   

The Institute has standard agreements that can be used by architects for their projects and encourages the use of its Client Architect Agreement to save the navigation of bespoke agreements. Refer to the 2024 Client Architect Agreement (CAA2024) and the 2024 Client Architect Agreement for Limited Services (CAALS2024). Refer to Client and architect agreements for further information on the types of agreements.

It is common practice for client organisations ie government institutions, property developers, and those overseeing large-scale building programs, to develop bespoke conditions of engagement for architects and other professional consultants.

‘It is important to understand the constituent parts of the Client Architect Agreement and potential impact on business and project risk that specific inclusions, exclusions and omissions may impose; being wary of terminology that increases risk, such as unqualified warranties, guarantees and undefined indemnities. Architects should be cognisant of services and commitments that may fall outside the cover of their professional indemnity insurance and know when to seek professional legal and insurance advice.’ 2021 NSCA Explanatory Notes and definitions PC 5 – Client Architect Agreement

‘Often client generated agreements are drafted by professionals who are exclusively protecting the interests of their clients. This results in conditions that may be considered unfair, unreasonable, or uninsurable in part or whole’. Refer to Acumen note Client-generated agreements for further information.

Architect and Consultant Agreement

‘Engagement of secondary and sub-consultants refers to the process, implications, inherent benefits, and risks of either directly engaging consultants or having the client engage the consultants directly. Moreover, there needs to be recognition that whichever form of engagement is adopted, an architect should undertake due diligence on the prospective consultants including confirming their qualifications, their capacity to undertake the project, whether there are limits on their liability, and whether their conditions of engagement are consistent with those of the architect.’ 2021 NSCA Explanatory Notes and definitions 

The Institute provides a standard form of agreement titled Architect–Specialist Consultant Agreement (ASCA) 2017, intended for use when an architect engages a specialist consultant directly. Under this arrangement, the consultant is contractually retained as a sub-consultant to the architect, rather than to the client. For further clarification regarding the distinction between sub-consultants and secondary consultants—as well as the associated implications for professional liability—refer to guidance on Specialist consultants and Architect's liability for specialist consultants.

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Agreement best practice

There are established best practice principles that should be followed in relation to an architectural commission

They include:

• Agree fees and conditions as soon as you are engaged and before commencing work. Some architects still commence work before the fees and conditions are approved, this risk can lead to ambiguity, disagreement and potentially the loss of part or all of their fees. 
• Before commencing work on a commission, architects should agree their fee, terms and conditions in writing. This is a requirement under most Architects Acts, and failure to do so may constitute a breach of professional obligations.’ 2021 NSCA Explanatory Notes and definitions PC 5 – Client Architect Agreement
• Do not refer to non-existent documents and check the documents you do mention. For example, there is no Australian Institute of Architect fee scale or fee guide. 
• Agreements must be in writing. Under the majority of Architects Acts it is a requirement of the regulations that such agreements should be in writing. Check the provisions of the Architects Act, regulations, and/or code of professional conduct in your state or territory for similar provisions. Refer Codes of conduct.
• Some professional indemnity insurance policies contain a provision requiring the insurer to pay or contribute to the legal costs for recovering fees owed to the insured architect. However, a common condition in insurance policies is that there must be an agreement in writing between the architect and the client. Read your professional indemnity insurance policy and check that the form of agreement you plan to use is adequate.
• It is necessary to notify your client in writing if you are required to proceed (eg in order to meet a proposed program) before a client agreement is executed. You should advise that you will proceed in accordance with the conditions stated on your client agreement until the written acceptance is received.
• Whenever possible use the agreements published by the Institute.

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Unacceptable requirements

Architects should be aware that accepting certain conditions of engagement may compromise their professional indemnity insurance—particularly when those conditions impose requirements that are unreasonable, uninsurable, or outside the architect’s professional scope.

Architects must exercise caution when reviewing conditions of engagement, as certain clauses may compromise their professional indemnity insurance. This risk arises particularly when the terms impose obligations that are unreasonable, uninsurable, or extend beyond the architect’s professional responsibilities. Examples include accepting unlimited liability, guaranteeing outcomes outside their control, or agreeing to indemnify clients for third-party actions. Such requirements not only expose the architect to significant legal and financial risk but may also invalidate coverage under their insurance policy. It is essential that architects seek legal or insurance advice before agreeing to any conditions that may fall outside standard professional practice.

They include to:

• extend the architect's liability to matters and degrees of skill beyond those which could be considered by the courts to be within the area of responsibility and expertise of an average practitioner
• arrange for an architect's liability to be determined other than by the courts (e.g. determination by arbitration or expert determination would not be acceptable, unless previously agreed with the insurer)
• indemnify against negative outcomes, or require the architect to expressly 'warrant', 'guarantee' or 'ensure' outcomes
• contain onerous confidentiality clauses which may limit the architect's ability to consult with others (e.g. with authorities and other stakeholders, thereby precluding them from performing their contractual obligations)
• prejudice the architect's insurer's rights which may restrict the architect's cover to the extent that those rights have been waived (eg 'release' clauses and clauses that seek to restrict – either in time or money – the architect's ability to recover damages from a third party)
• oblige an architect to produce any result that is fit for purpose
• require the architect to sign a separate collateral contract with a third party.

Architects should be aware that having these types of clauses in an agreement does not invalidate their insurance for that particular project. The architect will still be insured for their usual legal liability under statute or common law, but the additional legal liability imposed as a result of the offending clauses may not be insured.

Importantly, any conditions of engagement which might compromise professional indemnity cover could not only be detrimental to the architect, but could also be unsatisfactory to the client, as the professional indemnity insurance of its consultants is one of the client's main protections.

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Clarifying design intent

The term ‘design intent’ in architectural practice has been used for many years, generally as an encompassing term referring to an outcome that includes the finished built work as well as the individual and collective ambitions of the client, designer, and relevant stakeholders for the project. Capturing and communicating ‘design intent’ is challenging as contract documents often only communicate the built-form component of a project’s aspirations, not the non-physical ambitions/requirements of the project.

If the term design intent is used in any contract, i.e. a client architect agreement, specification or building contract, then its meaning should be explicitly defined within a glossary or further elaborated at the point it is used.

Care should be taken when expressing the word ‘design intent,’ particularly when a contract is in place between parties. Using the term ‘design intent’ to justify or provide more detail when there is a lack of clarity might be contradictory to the contractual terms. For example, a clause such as: 'The architect will provide inspections during construction to determine compliance to design intent' may increase the scope of services beyond what was intended. In such an instance, any clause which outlines services to be provided should be itemised in greater detail instead of using the term ‘design intent.’

As the term ‘design intent’ has no universally accepted meaning, its usage – particularly in contracts – should be defined and agreed upon or avoided.

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Guiding principles for balanced and insurable client architect agreements

Below is the list of 5 Principals from the Institute's publication, Guiding Principles for Balanced and Insurable Client Architect Agreements and is intended to be used by architects and their clients, including government departments and agencies, developers and other construction industry participants; and financial and legal professionals. 

The ‘Guiding Principles’ provide guidance to architects, clients, and the authors of agreements on the respective roles and responsibilities of architects and clients in the provision of architectural services and explains why certain types of obligations may be acceptable or unacceptable.

Principle 1 - Clauses should not unfairly extend the scope of the architect’s services, or their legal duties.

Principle 2 - Clauses should not unreasonably increase the architect’s liability for the services provided beyond that required at law.

Principle 3 – Clauses should not undermine the architect’s entitlement to appropriate remuneration for services.

Principle 4 – Clauses should not override common law and statutory rights.

Principle 5 – Mutual obligation provisions

In view of the possible adverse consequences for both architect and client, architects are strongly advised to look closely at conditions of engagement which differ from the standard Institute form. If in doubt, you should seek advice from your insurer or lawyer for bespoke clauses that seem unreasonable.

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