commentary on aia document a201-1997

Commentary on AIA Document A201-1997

Table of Contents

Introduction

Annotated A201

This commentary was prepared by the American Institute ofArchitects with the assistance of Charles R. Heuer, Esq., FAIA(for the original material) and Howard G. Goldberg, Esq., Hon.AIA (for editorial changes and supplementary material con-cerning the 1997 edition of A201).

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Introduction

Most prime contracts on construction projects include a general conditions document. On build-ing projects in the United States, the one most commonly used is AIA Document A201. Perhapsbecause this document is so familiar to architects and contractors, its usefulness in coordinatingthe project is often overlooked.

Subcontracts ordinarily adopt by reference the relevant portions of the contract between ownerand contractor—including the general conditions. The subcontracts then require that their terms“pass through” to sub-subcontractors, and so on down through the tiers, so that all parties per-forming work on the site will be coordinated by one general conditions document. The generalconditions define the owner’s and architect’s roles and authority on the project, and are refer-enced in turn by the owner-architect agreement. If the contractor provides performance and pay-ment bonds, the contractor’s surety guarantees what is required under those same general condi-tions. If the owner’s lender requires assignment of the construction contract, it proposes toassume the owner’s responsibilities under the general conditions as well.

On a well-organized project, all participants are bound in some measure by the general condi-tions. This document brings order to a diffuse process, seemingly made to order for finger-pointing, by establishing clearly defined lines of authority. The general conditions performanother vital function on competitively bid projects, providing a commonly recognized baselinethat bidders can use—in a relatively short time and with limited legal services—to measure therisks and benefits of the proposed bargain. Not coincidentally, the widespread use of generalconditions in this country may be traced to the years immediately following passage of the SnagAct, which first required open competitive bidding on U.S. government contracts.

The AIA published its first general conditions document, the ancestor of A201, in 1911. Sincethat time, many procedures that have become customary in construction contracting have origi-nated in AIA general conditions documents. Numerous government construction contract formshave been patterned on A201. The document represents the accumulated experience of genera-tions of owners, architects, contractors, subcontractors and others involved in the constructionprocess, and its language has been drafted with a view to allowing only one unambiguous inter-pretation. That language has formed the basis for thousands of court decisions. A useful guideto the case law on A201 and other AIA documents is The American Institute of ArchitectsLegal Citator (New York: Matthew Bender, 1999).

A further advantage of A201 is that experienced participants in the construction process arethoroughly familiar with it. They can then focus on the supplementary and other conditions thatmodify the known baseline. And, at the risk of stating the obvious, the document is intended tobe modified. It is a standard form and cannot perfectly fit all the projects on which it is used.

A201’s wide acceptance stems in part from the AIA’s drafting process, which seeks to develop aconsensus among those who represent interests significantly affected by the document. A201-

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1997, like its precursors, is the product of years of discussions involving owners, contractors,subcontractors and architects, as well as legal and insurance counsel. It has been approved andendorsed by the Associated General Contractors of America.

Drafting of A201-1997 was coordinated with the drafting of other related AIA documents.These include the 1997 editions of the A101 and A111 agreement forms, the A401 subcontractform and the owner-architect agreements, B141 and B151. All of these documents incorporatethe 1997 A201 by reference. Because of interlinkages among the various AIA documents, usersshould be careful to use only the latest edition of any AIA document in order to ensure consis-tency in the terms of the various documents.

A201 is also incorporated by reference into some of AIA’s owner-construction manager agree-ments and design/build agreements. Contact the AIA concerning any recently published amend-ments for use in adapting A201-1997 to these other documents.

A201-1997 is the fifteenth edition, incorporating the latest refinements as well as experiencegained over the past century. The revisions are based on input received from owners, contrac-tors, architects, subcontractors and others involved in the construction process. Note, however,that the scope of this Commentary is not limited to the 1997 revisions. The annotations con-tained herein are intended to cover “frequently asked questions” about the entire document.

Changes in the 1997 Edition

The principal changes are summarized below. For a side-by-side comparison of the 1997 editionwith its predecessor, showing changes with underlining and strike-throughs, see AIA DocumentA201: Comparison of 1987 and 1997 Editions. This publication is contained in the A201-1997Education Kit, along with the Briefing Module Manual and a copy of the document itself.

Owner’s Information. Under Subparagraph 2.2.1, the owner is required to notify the contractorprior to changing financial arrangements for the project. Under Subparagraph 2.2.3, the contrac-tor is entitled to rely on information provided by the owner. Subparagraph 2.2.4 requires theowner to furnish information or services relevant to the Contractor’s Work.

Contractor’s Review of Contract Documents and Field Conditions. Paragraph 3.2 requiresthe contractor to review the contract documents and report any errors or omissions to the archi-tect. The contractor performs this review in its capacity as a contractor, and is not required tosecond-guess decisions made by the architect as a design professional.

Substitutions. Under Subparagraph 3.4.2, substitutions may only be made in accordance with achange order, thus requiring the owner’s approval.

Incidental Design Services. Subparagraph 3.12.10 lays out the ground rules for provision ofdesign services for systems or components by the contractor.

Indemnification. The phrase “in whole or in part” has been eliminated from Subparagraph

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3.18.1, bringing it fully into line with the comparative fault rule adopted in most jurisdictions.The exception for actions of the architect has also been eliminated. The indemnification provi-sion has also been modified for use with Project Management Protective Liability coverage, dis-cussed below.

Mutual Waiver of Consequential Damages. Under Subparagraph 4.3.10, the owner and con-tractor waive claims for consequential damages. This provision limits the parties to direct dam-ages arising out of any dispute under the contract.

Mediation. Under Paragraph 4.5, mediation is now required as a condition precedent to arbitra-tion or litigation. This requirement is independent of the arbitration provision, and will applyeven if arbitration is deleted.

Construction Change Directives. Subparagraph 7.3.8 requires that amounts not in disputeunder construction change directives be included in applications for payment, and provides forinterim determination by the architect of amounts that remain in dispute.

Applications for Payment. Under Clause 9.3.1.2, the contractor may apply for amounts it doesnot intend to pay to subcontractors if the work in question has been performed by others whomthe contractor does intend to pay.

Payments to be Held for Subcontractors. Subparagraph 9.6.7 requires the contractor, in theabsence of a bond, to hold in trust payments received for subcontractors or suppliers who haveproperly performed work.

Release of Retainage. Under Subparagraph 9.8.5, full release of retainage is required at sub-stantial completion.

Hazardous Materials. Subparagraph 10.3.1 defines hazardous materials to include harmfulsubstances other than asbestos and PCB. Under Subparagraph 10.3.2, Work in an area affectedby hazardous material will resume by agreement of the parties and without a decision by thearchitect. Under Paragraph 10.4, the owner is absolved of responsibility for materials brought onthe site by the contractor (other than those required by the contract documents). UnderParagraph 10.5, the owner indemnifies the contractor for remediation costs of the kind thatmight arise under CERCLA, provided the contractor was not negligent and incurred liabilitysolely by performing work as required under the contract.

Insurance. Paragraph 11.3 gives the owner the option of requiring the contractor to purchase aProject Management Protective Liability policy. This new policy provides primary coverage forthe owner’s, contractor’s and architect’s liability to third-parties based on their authority to man-age the project. If the owner chooses to exercise this option, the contract sum will be adjusted toreflect the cost of purchase.

Correction of Work. Under Clause 12.2.2.1, failure by the owner to notify the contractor of

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defective work discovered during the one-year correction period is deemed a waiver of both thecorrection and warranty remedies with respect to that work.

Termination by the Owner for Convenience. Under Paragraph 14.4, the owner is now permit-ted to terminate the contract for convenience.

As the foregoing discussion makes clear, the 1997 edition of A201 is a refinement of the 1987edition and builds on the experience gained with it and earlier editions. Much of the documentis unchanged. Provisions that are essentially unchanged include the contractor’s warranty, shopdrawing review, arbitration, change orders, tests and inspections, and termination by the contrac-tor.

Modifying the General Conditions

As mentioned earlier, A201 is intended to be modified. It is designed for general use, and can-not include all the requirements applicable to a specific project and location. changes should bemade with great care, however. Numerous considerations specific to each project will determinewhat modifications are needed, but guidance on how to make them may be given in terms offour broad principles.

Make sure the changes show. Parties such as contractors, subcontractors, lenders, insurers andsureties routinely take risks based on contract documents prepared by others. To the extent thosedocuments are based on recognized standard forms, the variations in risk from the baseline ofthe standard form are exposed for scrutiny. The operative term here is recognized: modificationsshould be made in such a way that they will stand out clearly from the text of the standard docu-ment. If the document is retyped, scanned or otherwise merged with text from another origin,that distinction will be obscured.

There are a number of problems with retyping and scanning: they introduce the possibility oferrors, and even minor errors may make the legal effect of the language less certain. The over-riding problem, however, is that the baseline of the standard document is obscured and the effi-ciency inherent in standardization is lost. A lending institution, for example, will often authorizeits loan officer to sign off on construction loans when standard forms are used. Retyped orscanned versions of the same forms commonly require review by the lender’s attorneys, becausethese processes introduce many of the same unknowns as are present in manuscript contracts.

Contractors, who must quickly calculate risk based on vast amounts of information, make simi-lar judgments. Lacking the time to have legal counsel review an unfamiliar general conditionsdocument, a prudent contractor will at least apply a contingency multiplier to its bid or propos-al. Or, depending on market conditions and the unknowns involved, the contractor may foregothe project.

Make changes in the proper location. Over the years, the construction industry has developeda pattern of accepted locations of subject matter within the contract documents. AIA DocumentA521, Uniform Location of Subject Matter, sets out this pattern in great detail. A521 is prepared

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and updated by the AIA and the Engineers’ Joint Contract Documents Committee (EJCDC), andpublished jointly by the AIA, EJCDC’s member organizations and the ConstructionSpecifications Institute (CSI). No summary statement can substitute for actual study of this doc-ument, but the following considerations apply generally to changes to the general conditions.

Matters affecting the basic legal rights and responsibilities of the parties, but which vary fromone project to another, should be included in the supplementary conditions.

Matters having to do with temporary facilities and administrative and procedural requirementsshould be included in division 1 of the specifications.

Matters relating to specifications are outside the scope of this commentary; readers are referredto AIA’s MASTERSPEC™ and CSI’s Manual of Practice. Guidance in preparing supplementaryconditions may be found in AIA Document A511, Guide for Supplementary Conditions.

As the term would imply, supplementary conditions are usually assembled as a separate docu-ment. Users of the software AIA Contract Documents: Electronic Format for Windows™ maywish to incorporate such modifications directly into the text of A201-1997, where they will bedistinguished from the standard language via underscoring and strike-throughs. Generally, theuse of separate supplementary conditions is the more accepted practice at this time.

Make only the changes you need. In order to coordinate the efforts of the various participantson the project, A201’s language contains numerous linkages. These occur both within A201itself and between A201 and other AIA documents. For obvious reasons, A201 is adopted byreference into certain AIA owner-contractor agreement forms. It is also adopted into AIAowner-architect agreements and into AIA’s subcontract form. All of these documents rely oncommon definitions, most of which are found in A201. Finally, “flow down” provisions requirethat rights and responsibilities originating in A201 and other contract documents be passedthrough to subcontractors and sub-subcontractors.

All this means that changes made to A201 can have unintended consequences. To guard againstthis possibility, the wise course is to make only the modifications required and to do so usingthe vocabulary of the document itself. Purely stylistic changes should be avoided.

Other AIA General Conditions Documents

AIA Document A201 is the keystone document for construction projects organized along “con-ventional”, “traditional,” or “design/bid/build” lines—where the architect and contractor areretained directly, and separately, by the owner, and where an independent construction manageris not retained. Other AIA general conditions documents are described briefly below.

AIA Document A201/CMa, General Conditions of the Contract for Construction—ConstructionManager/Adviser Edition, is intended for use on construction projects where a constructionmanager is retained in the role of independent adviser to the owner. Note that this documentshould not be used on projects where the construction manager acts as the constructor, or where

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the construction manager contracts directly with those who supply labor and materials for theproject.

AIA Document A205, General Conditions of the Contract for Construction of a Small Project,is packaged with AIA Document A105, Standard Form of Agreement Between Owner and con-tractor for a Small Project. These documents are intended for use on projects of modest size andbrief duration where the basis of payment is a stipulated sum. They do not contain the detail ofother AIA documents, and should not be considered substitutes for them.

AIA Document A271, General Conditions of the Contract for Furniture, Furnishings andEquipment, is intended for use for use as part of interiors contracts under which only incidentalconstruction is performed.

Condensed general conditions are contained in AIA Documents A107, Abbreviated Owner-Contractor Agreement Form for Construction Projects of Limited Scope, and A177,Abbreviated Owner-Contractor Agreement for Furniture, Furnishings and Equipment. Theseabbreviated forms should not be used with other general conditions documents.

General Principles Underlying AIA Forms

AIA form documents are intended to benefit all who participate in the design and constructionprocess. This includes, above all, the public, whose members are the ultimate users of the builtenvironment. They are, in fact, the focus of the AIA’s commitment to “coordinate the buildingindustry and the profession of architecture to insure the advancement of the living standards ofour people through their improved environment.” To ensure the acceptance of its standard formcontracts by the construction industry, the AIA relies on a consensus-building process aimed atbalancing the interests of all participants through a reasonable apportionment of risks andresponsibilities. No one party’s interests are allowed to dominate, including those of the archi-tect. This is the basis of the reputation of fairness and balance that AIA forms have gained inover a century of use. To learn more about the AIA’s approach to drafting contract documents,write to obtain a copy of AIA Document M120, Documents Drafting Principles.

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DOCUMENT TEXT COMMENTS

The contract documents include the listedelements, as appropriate for the project. Theterm other conditions refers to federal, state,local or private contract conditions; theseare usually prescribed by the owner. Forexample, see AIA Document A201/SC,Federal Supplementary Conditions of theContract for Construction.

The definitions used in AIA DocumentA201-1997 are capitalized under the con-ventions described in Subparagraph 1.3.1.They are incorporated into many of theother related AIA documents by reference toAIA Document A201-1997. These docu-ments include owner-contractor, owner-architect, contractor-subcontractor andarchitect-consultant agreements.

The contract documents defined here gen-erally apply to the owner-contractor con-tract. In addition, specific parts of the con-tract documents, mainly the general condi-tions (i.e., A201) are adopted (usually byreference) into other contracts. This servesto coordinate the legal relationships on theproject.

GENERAL CONDITIONS OF THECONTRACT FOR CONSTRUCTIONThis document has important legal con-sequences. Consultation with an attorneyis encouraged with respect to its comple-tion or modification.

Copyright © 2001 The AmericanInstitute of Architects. Reproduction ofthe material herein or substantial quota-tion of its provisions without written per-mission of the AIA violates the copyrightlaws of the United States and will subjectthe violator to legal prosecution.WARNING: Unlicensed photocopyingviolates U.S. copyright laws and willsubject the violator to legal prosecution.

ARTICLE 1 GENERAL PROVISIONS

1.1 BASIC DEFINITIONS

1.1.1 THE CONTRACT DOCUMENTSThe Contract Documents consist of theAgreement between Owner andContractor (hereinafter the Agreement),Conditions of the Contract (General,Supplementary and other Conditions),Drawings, Specifications, Addendaissued prior to execution of the Contract,other documents listed in the Agreementand Modifications issued after executionof the Contract. A Modification is (1) awritten amendment to the Contractsigned by both parties, (2) a ChangeOrder, (3) a Construction ChangeDirective or (4) a written order for aminor change in the Work issued by theArchitect. Unless specifically enumerat-ed in the Agreement, the ContractDocuments do not include other docu-ments such as bidding requirements

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DOCUMENT TEXTCOMMENTS

Some public owners require that the biddingrequirements be included in the definition ofthe contract documents. This may createconflicts or ambiguities with the other docu-ments that comprise the contract. This prob-lem can be avoided if the bidding require-ments are superseded when the contract forconstruction is awarded. If statutoriallyrequired contract language is contained inthe bidding requirements, such languagecan be included in the supplementary con-ditions.

One effect of this provision is that everythingthat was discussed as part of negotiationsthat conflicts with or is inconsistent with thewritten agreement is not part of the contract.

AIA Document A201-1997 and its relatedfamily of AIA documents are based on thepremise that legal relationships on a con-struction project are comprised of two-partycontractual arrangements. Thus, there arethe owner-contractor contract, owner-archi-tect contract, contractor-subcontractor con-tracts and architect-consulting engineeringcontract. Each party to those respectivecontracts is deemed to be in privity only withthe other party to the contract.

There is no direct contractual relationshipbetween the architect and the contractor.The architect is in some instances entitledto enforce certain obligations of the contrac-tor (such as indemnifying the architect forcertain risks, performing warranty obliga-tions, providing certain types of insuranceand affording the architect access to thework). In cases where the owner is unavail-able, insolvent or uncooperative, it can beimportant for the architect to have the rightto enforce these obligations directly againstthe contractor.

(advertisement or invitation to bid,Instructions to Bidders, sample forms,the Contractor's bid or portions ofAddenda relating to bidding require-ments).

1.1.2 THE CONTRACTThe Contract Documents form theContract for Construction. The Contractrepresents the entire and integratedagreement between the parties heretoand supersedes prior negotiations, repre-sentations or agreements, either writtenor oral. The Contract may be amended ormodified only by a Modification. TheContract Documents shall not be con-strued to create a contractual relation-ship of any kind (1) between theArchitect and Contractor, (2) betweenthe Owner and a Subcontractor orSub-subcontractor, (3) between theOwner and Architect or (4) betweenany persons or entities other than theOwner and Contractor. The Architectshall, however, be entitled to perfor-mance and enforcement of obligationsunder the Contract intended to facili-tate performance of the Architect'sduties.

1.1.3 THE WORKThe term "Work" means the construc-

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COMMENTSDOCUMENT TEXT

The term work appears throughout AIADocument A201-1997 family of documents.As a defined term, work is especially impor-tant (1) for describing the contractor’s oblig-ations to provide improvements to the pro-ject, (2) for defining the scope of the proper-ty insurance required under Paragraph 11.4,and (3) for distinguishing between the con-tractor’s efforts and the efforts of theowner’s other contractor who may also beon the project.

The term project is broader than the termwork, and may involve separate contractorsor the owner’s own forces. Each separatecontract includes a scope of work that isunique to that contract.

The term drawings includes more than thebound set of prints first received by the con-tractor. Drawings are also found in addenda,change orders, construction change direc-tives, minor changes in the work and othermodifications in the work.

The specifications are written descriptionsthat qualitatively define the work. It is nowcommon construction industry practice toorganize the specifications according to the16 divisions of MASTERFORMAT, a publi-cation of the Construction SpecificationsInstitute. Each division is further organizedinto a collection of custom sections whichdescribe the general scope, products to beused and execution of the particular item ofwork, such as cast-in-place concrete. Underthe AIA’s auspices, a library of master spec-ification sections, known as MASTERSPEC,is currently published and available on anannual subscription basis.

tion and services required by theContract Documents, whether completedor partially completed, and includes allother labor, materials, equipment andservices provided or to be provided bythe Contractor to fulfill the Contractor'sobligations. The Work may constitute thewhole or a part of the Project.

1.1.4 THE PROJECTThe Project is the total construction ofwhich the Work performed under theContract Documents may be the wholeor a part and which may include con-struction by the Owner or by separatecontractors.

1.1.5 THE DRAWINGSThe Drawings are the graphic and picto-rial portions of the Contract Documentsshowing the design, location and dimen-sions of the Work, generally includingplans, elevations, sections, details,schedules and diagrams.

1.1.6 THE SPECIFICATIONSThe Specifications are that portion ofthe Contract Documents consisting ofthe written requirements for materials,equipment, systems, standards andworkmanship for the Work, and perfor-mance of related services.

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The project manual is the volume (or vol-umes) usually assembled for the projectcontaining those contract documents thatcan be bound in book format. It may alsocontain other documents, such as biddingrequirements, which are not contract docu-ments.

Because the contract documents are a col-laborative effort sometimes involving theowner, architect and numerous consultants,there is no inherent order of precedenceamong those documents. For instance, aplan may show a door, a door schedule willdesignate the type of door and hardware,one specification section may specify thequality of door and another specificationsection will specify the quality of hardware.Collectively, those contract documents areused to describe that particular work item.Moreover, a pre-selected order of prece-dence assumes that one item is moreimportant than another. For instance,assuming that the plans are chosen to pre-vail over the specifications, if the plans didnot show the hinges on the door eventhough the specifications required them, theowner might get a hingeless door. Underthese circumstances, a pre-selected orderof precedence may cause an absurd result.

The contractor is expected to make reason-able inferences from the contract documents.When the documents show wall partitionscovered by drywall, for example, it may beinferred that some reasonable method willbe used to attach the drywall to the underly-ing framework.

1.1.7 THE PROJECT MANUALThe Project Manual is a volume assem-bled for the Work which may include thebidding requirements, sample forms,Conditions of the Contract andSpecifications.

1.2 CORRELATION AND INTENTOF THE CONTRACT DOCUMENTS1.2.1 The intent of the ContractDocuments is to include all items neces-sary for the proper execution and com-pletion of the Work by the Contractor.The Contract Documents are comple-mentary, and what is required by oneshall be as binding as if required by all;performance by the Contractor shall berequired only to the extent consistentwith the Contract Documents and rea-sonably inferable from them as beingnecessary to produce the indicatedresults.

1.2.2 Organization of theSpecifications into divisions, sections

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The contractor is responsible for allocatingportions of the work to the subcontractorsand others, within the limits required by thecontract documents.

In years past, attempts were made by own-ers and architects to separate differentscopes of work utilizing the specifications.This produced considerable controversyand confusion, which was finally resolved bythe construction industry’s adoption of the16-division organization for specificationsthat is not linked to any particular allocationof work to subcontractors.

The convention of capitalizing defined termsin AIA Document A201-1997 is not requiredto be carried through to other contract doc-uments that may utilize these definitions.

These unsigned documents might beincluded in the contract by reference but notphysically attached to it. If the identity ofsuch documents becomes an issue, thisprovision describes the procedure forauthenticating them.

and articles, and arrangement ofDrawings shall not control theContractor in dividing the Work amongSubcontractors or in establishing theextent of Work to be performed by anytrade.

1.2.3 Unless otherwise stated in theContract Documents, words which havewell-known technical or constructionindustry meanings are used in theContract Documents in accordance withsuch recognized meanings.

1.3 CAPITALIZATION 1.3.1 Terms capitalized in theseGeneral Conditions include those whichare (1) specifically defined, (2) the titlesof numbered articles and identified refer-ences to Paragraphs, Subparagraphs andClauses in the document or (3) the titlesof other documents published by theAmerican Institute of Architects.

1.4 INTERPRETATION 1.4.1 In the interest of brevity theContract Documents frequently omitmodifying words such as "all" and "any"and articles such as "the" and "an," butthe fact that a modifier or an article isabsent from one statement and appears inanother is not intended to affect the inter-pretation of either statement.

1.5 EXECUTION OF CONTRACT DOCUMENTS1.5.1 The Contract Documents shall besigned by the Owner and Contractor. Ifeither the Owner or Contractor or bothdo not sign all the Contract Documents,the Architect shall identify suchunsigned Documents upon request.

1.5.2 Execution of the Contract by theContractor is a representation that the

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Drawings, specifications and other docu-ments created by the architect and archi-tect’s consultants to provide their servicesare collectively called “Instruments ofService.” This term underscores the fact thatthese documents, whether in printed orelectronic form, cannot be separated fromthe services the architect provides throughthem and through other activites on the pro-ject.

The contractor and the various subcontrac-tors, sub-subcontractors and suppliers aregiven a limited authorization to use suchinstruments of service on the project.Restrictions on their use protect the inter-ests of the owner, architect and architect’sconsultants, and also serve to protect thepublic from harm that may result from theirmisapplication.

Contractor has visited the site, becomegenerally familiar with local conditionsunder which the Work is to be performedand correlated personal observationswith requirements of the ContractDocuments.

1.6 OWNERSHIP AND USE OFDRAWINGS, SPECIFICATIONSAND OTHER INSTRUMENTS OFSERVICE 1.6.1 The Drawings, Specifications andother documents, including those in elec-tronic form, prepared by the Architectand the Architect’s consultants areInstruments of Service through whichthe Work to be executed by theContractor is described. The Contractormay retain one record set. Neither theContractor nor any Subcontractor, Sub-subcontractor or material or equipmentsupplier shall own or claim a copyrightin the Drawings, Specifications and otherdocuments prepared by the Architect orthe Architect’s consultants, and unlessotherwise indicated the Architect and theArchitect’s consultants shall be deemedthe authors of them and will retain allcommon law, statutory and otherreserved rights, in addition to the copy-rights. All copies of Instruments ofService, except the Contractor's recordset, shall be returned or suitably account-ed for to the Architect, on request, uponcompletion of the Work. The Drawings,Specifications and other documents pre-pared by the Architect and theArchitect’s consultants, and copies there-of furnished to the Contractor, are for usesolely with respect to this Project. Theyare not to be used by the Contractoror any Subcontractor, Sub-subcon-tractor or material or equipment sup-plier on other projects or for additionsto this Project outside the scope of the

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The term owner is used to designate theparty contracting with the construction con-tractor. That person or entity may or may notactually own the project. For example, theowner may be a tenant.

For certain purposes the architect is a rep-resentative of the owner, but the “owner’sdesignated representative” is the personappointed to serve in that capacity underArticle 2. Provisions requiring approval oraction by the owner’s designated represen-tative refer to that individual and not to thearchitect.

If more than one designated representativeis required, the separate roles and functionsof each individual should be clearly definedso as to avoid conflicts, gaps and confusionas to each individual’s proper authority toact on behalf of the owner.

Work without the specific written con-sent of the Owner, Architect and theArchitect’s consultants. TheContractor, Subcontractors, Sub-subcon-tractors and material or equipment sup-pliers are authorized to use and repro-duce applicable portions of theDrawings, Specifications and other doc-uments prepared by the Architect and theArchitect’s consultants appropriate toand for use in the execution of their Workunder the Contract Documents. Allcopies made under this authorizationshall bear the statutory copyright notice,if any, shown on the Drawings,Specifications and other documents pre-pared by the Architect and theArchitect’s consultants. Submittal or dis-tribution to meet official regulatoryrequirements or for other purposes inconnection with this Project is not to beconstrued as publication in derogation ofthe Architect's or Architect’s consultants’copyrights or other reserved rights.

ARTICLE 2 OWNER

2.1 GENERAL2.1.1 The Owner is the person or entityidentified as such in the Agreement andis referred to throughout the ContractDocuments as if singular in number. TheOwner shall designate in writing a rep-resentative who shall have expressauthority to bind the Owner with respectto all matters requiring the Owner'sapproval or authorization. Except as oth-erwise provided in Subparagraph 4.2.1,the Architect does not have such author-ity. The term "Owner" means the Owneror the Owner's authorized representative.

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Every state with a mechanic’s lien statuterequires filings of liens to state the correctlegal description of the property againstwhich the lien claim is being asserted. If thestatute is not strictly complied with, the filingmay not be adequate to enforce the lien.Thus, the lien rights of the contractor, sub-contractors and sub-subcontractors maydepend on the information required of theowner under this subparagraph.

Reasonable evidence of the owner’s abilityto finance the project may be a loan com-mitment letter from an institutional lender, agovernmental appropriation or other equallyconvincing documentation. If financialarrangements will not be concluded prior toexecution of the agreement, a supplemen-tary condition will be needed to clarify thoseexceptional circumstances.

2.1.2 The Owner shall furnish to theContractor within fifteen days afterreceipt of a written request, informationnecessary and relevant for theContractor to evaluate, give notice ofor enforce mechanic's lien rights. Suchinformation shall include a correct state-ment of the record legal title to the prop-erty on which the Project is located, usu-ally referred to as the site, and theOwner's interest therein.

2.2 INFORMATION AND SERVICES REQUIRED OF THEOWNER2.2.1 The Owner shall, at the writtenrequest of the Contractor, prior to com-mencement of the Work and thereafter,furnish to the Contractor reasonable evi-dence that financial arrangementshave been made to fulfill the Owner'sobligations under the Contract.Furnishing of such evidence shall be acondition precedent to commencementor continuation of the Work. After suchevidence has been furnished, the Ownershall not materially vary such financialarrangements without prior notice to theContractor.

2.2.2 Except for permits and fees,including those required underSubparagraph 3.7.1, which are theresponsibility of the Contractor underthe Contract Documents, the Ownershall secure and pay for necessaryapprovals, easements, assessments andcharges required for construction, use oroccupancy of permanent structures or forpermanent changes in existing facilities.

2.2.3 The Owner shall furnish surveysdescribing physical characteristics, legallimitations and utility locations for the

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Since the owner retains the surveyor, thecontractor should be able to rely upon thesurvey and not have to duplicate this effortand expense.

This provision makes explicit, with respectto the owner, that the parties will cooperatewith each other and will not hinder theother’s work or progress.

Any restrictions on the number of copies ofdrawings and project manuals furnished tothe contractor should be stated in the sup-plementary conditions.

Under the proper circumstances, the ownermay stop the work. In this provision, theowner’s right to stop work relates specifical-ly to the contractor’s failure to comply withthe contract documents. This right may beexercised by the owner or the owner’s des-ignated representative under Subparagraph2.1.1.

site of the Project, and a legal descriptionof the site. The Contractor shall beentitled to rely on the accuracy ofinformation furnished by the Ownerbut shall exercise proper precautionsrelating to the safe performance of theWork.

2.2.4 Information or services requiredof the Owner by the Contract Documentsshall be furnished by the Owner withreasonable promptness. Any other infor-mation or services relevant to theContractor's performance of the Workunder the Owner's control shall be fur-nished by the Owner after receipt fromthe Contractor of a written request forsuch information or services.

2.2.5 Unless otherwise provided in theContract Documents, the Contractor willbe furnished, free of charge, such copiesof Drawings and Project Manuals asare reasonably necessary for executionof the Work.

2.3 OWNER'S RIGHT TO STOPTHE WORK2.3.1 If the Contractor fails to cor-rect Work which is not in accordancewith the requirements of the ContractDocuments as required by Paragraph12.2 or persistently fails to carry outWork in accordance with the ContractDocuments, the Owner may issue a writ-ten order to the Contractor to stop theWork, or any portion thereof, until thecause for such order has been eliminated;however, the right of the Owner to stopthe Work shall not give rise to a duty onthe part of the Owner to exercise thisright for the benefit of the Contractor orany other person or entity, except to theextent required by Subparagraph 6.1.3.

A201 Commentary 17


Under these circumstances, the owner mustfollow a specific procedure before beginningsome or all of the work under this contract.An initial written notice must be given to thecontractor demanding correction of theproblem. Upon receipt of this notice, thecontractor has seven days to begin and con-tinue to remedy the matter. If remedialaction has not been undertaken by the endof this seven-day period, the owner maygive the contractor a second notice. Thisnotice should state that the owner intends tocarry out the work if the contractor fails torespond adequately within three days. Thecontractor must commence and continue tocorrect deficiencies within this three-dayperiod, but is not required to complete thework within that time frame. If the contractordoes not commence and continue suchremedial action, the owner may correct thedeficiencies with the owner’s own forces.

A literal interpretation of this article requiresno additional notice beyond the three-dayperiod. The owner should consider notifyingthe contractor immediately before com-mencing work in order to avoid jurisdictionaldisputes at the job site.

Correcting the work is not intended to pre-clude the owner from pursuing other reme-dies such as arbitration or legal action forbreach of contract or breach of a warranty.The owner may also execute a changeorder or construction change directivededucting from the contract sum the cost ofcorrections, including compensation for thearchitect’s services in this regard.

The architect’s approval is required for all ofthe actions described above. The architectis expected to apply reasonable profession-al judgment in evaluating the issues as theyoccur. The architect may endeavor to obtainwritten representations on which to rely.

2.4 OWNER'S RIGHT TOCARRY OUT THE WORK2.4.1 If the Contractor defaults orneglects to carry out the Work inaccordance with the ContractDocuments and fails within a seven-dayperiod after receipt of written noticefrom the Owner to commence and con-tinue correction of such default orneglect with diligence and promptness,the Owner may after such seven-dayperiod give the Contractor a second writ-ten notice to correct such deficiencieswithin a three-day period. If theContractor within such three-day periodafter receipt of such second notice failsto commence and continue to correct anydeficiencies, the Owner may, withoutprejudice to other remedies the Ownermay have, correct such deficiencies. Insuch case an appropriate Change Ordershall be issued deducting from paymentsthen or thereafter due the Contractor thereasonable cost of correcting such defi-ciencies, including Owner’s expensesand compensation for the Architect'sadditional services made necessary bysuch default, neglect or failure. Suchaction by the Owner and amountscharged to the Contractor are both sub-ject to prior approval of the Architect.If payments then or thereafter due theContractor are not sufficient to coversuch amounts, the Contractor shall paythe difference to the Owner.

ARTICLE 3 CONTRACTOR

3.1 GENERAL3.1.1 The Contractor is the person or

18 A201 Commentary


Those persons or entities authorized to rep-resent the contractor (such as the construc-tion superintendent or manager) should beidentified to the owner and architect.

entity identified as such in theAgreement and is referred to throughoutthe Contract Documents as if singular innumber. The term "Contractor" meansthe Contractor or the Contractor's autho-rized representative.

3.1.2 The Contractor shall perform theWork in accordance with the ContractDocuments.

3.1.3 The Contractor shall not berelieved of obligations to perform theWork in accordance with the ContractDocuments either by activities or dutiesof the Architect in the Architect's admin-istration of the Contract, or by tests,inspections or approvals required or per-formed by persons other than theContractor.

3.2 REVIEW OF CONTRACTDOCUMENTS AND FIELD CONDITIONS BY CONTRACTOR3.2.1 Since the Contract Documentsare complementary, before starting eachportion of the Work, the Contractor shallcarefully study and compare the variousDrawings and other Contract Documentsrelative to that portion of the Work, aswell as the information furnished by theOwner pursuant to Subparagraph 2.2.3,shall take field measurements of anyexisting conditions related to that portionof the Work and shall observe any condi-tions at the site affecting it. These oblig-ations are for the purpose of facilitatingconstruction by the Contractor and arenot for the purpose of discovering errors,omissions, or inconsistencies in theContract Documents; however, anyerrors, inconsistencies or omissions dis-covered by the Contractor shall bereported promptly to the Architect as arequest for information in such form as

A201 Commentary 19


The contractor is required to report errorsand omissions promptly in order to minimizethe costs of correction.

The contractor is not expected to engage ina professional review of the architect’sdesign. If professional design services arerequired of the contractor pursuant toSubparagraph 3.12.10, review by the con-tractor’s design professional is required tothe extent necessary to coordinate suchdesign professional’s services with those ofthe contractor.

As with discovery of errors and omissions,above, prompt notice is required in order tominimize the costs of correction.

the Architect may require.

3.2.2 Any design errors or omissionsnoted by the Contractor during thisreview shall be reported promptly to theArchitect, but it is recognized that theContractor's review is made in theContractor's capacity as a contractor andnot as a licensed design professionalunless otherwise specifically providedin the Contract Documents. TheContractor is not required to ascertainthat the Contract Documents are inaccordance with applicable laws,statutes, ordinances, building codes, andrules and regulations, but any nonconfor-mity discovered by or made known to theContractor shall be reported promptly tothe Architect.

3.2.3 If the Contractor believes thatadditional cost or time is involvedbecause of clarifications or instructionsissued by the Architect in response to theContractor's notices or requests for infor-mation pursuant to Subparagraphs 3.2.1and 3.2.2, the Contractor shall makeClaims as provided in Subparagraphs4.3.6 and 4.3.7. If the Contractor fails toperform the obligations ofSubparagraphs 3.2.1 and 3.2.2, theContractor shall pay such costs and dam-ages to the Owner as would have beenavoided if the Contractor had performedsuch obligations. The Contractor shallnot be liable to the Owner or Architectfor damages resulting from errors, incon-sistencies or omissions in the ContractDocuments or for differences betweenfield measurements or conditions and theContract Documents unless theContractor recognized such error, incon-sistency, omission or difference andknowingly failed to report it to theArchitect.

20 A201 Commentary


This subparagraph recognizes the expertiseof the contractor, who determines the con-tract price based upon the particular con-struction process and sequence contem-plated.

In the event the contract documents give specific instructions regarding the construc-tion process, an exception is recognized inthe area of responsibility for jobsite safety.Responsibility remains with the contractorunless the contractor gives timely writtennotice of a particular safety concern and isinstructed to proceed as specified.

3.3 SUPERVISION AND CONSTRUCTION PROCEDURES3.3.1 The Contractor shall superviseand direct the Work, using theContractor's best skill and attention. TheContractor shall be solely responsible forand have control over constructionmeans, methods, techniques, sequencesand procedures and for coordinating allportions of the Work under the Contract,unless the Contract Documents giveother specific instructions concerningthese matters. If the Contract Documentsgive specific instructions concerningconstruction means, methods, tech-niques, sequences or procedures, theContractor shall evaluate the jobsitesafety thereof and, except as statedbelow, shall be fully and solely responsi-ble for the jobsite safety of such means,methods, techniques, sequences or pro-cedures. If the Contractor determinesthat such means, methods, techniques,sequences or procedures may not besafe, the Contractor shall give timelywritten notice to the Owner andArchitect and shall not proceed with thatportion of the Work without further writ-ten instructions from the Architect. If theContractor is then instructed to proceedwith the required means, methods, tech-niques, sequences or procedures withoutacceptance of changes proposed by theContractor, the Owner shall be solelyresponsible for any resulting loss ordamage.

3.3.2 The Contractor shall be responsi-ble to the Owner for acts and omissionsof the Contractor's employees,Subcontractors and their agents andemployees, and other persons or entitiesperforming portions of the Work for oron behalf of the Contractor or any of its

A201 Commentary 21


The contractor’s duty to furnish labor andmaterials incorporates the contractor’s rightto perform these services, but this right maybe limited by the owner’s right to stop work(Paragraph 2.3) or even carry out work(Paragraph 2.4) if the contractor is failing toperform adequately.

Substitutions made after execution of theagreement become changes in the workand must be made in accordance withArticle 7.

This warranty is a general representation bythe contractor that materials, equipmentand workmanship will conform to good qual-ity standards and the requirements of thecontract documents. This general warrantyis in addition to, and not in lieu of, any addi-tional obligations (see Paragraph 12.2 onCorrection of Work) and other warranties,such as those received from product manu-facturers and fabricators and forwarded tothe owner by the contractor.

The warranty under Paragraph 3.5 will typi-cally commence at the date of substantialcompletion (see Subparagraph 9.8.4) andcontinue through the period of the applica-ble statute of limitations or repose, whichev-er is shorter. The one-year correction periodof Paragraph 12.2 is a separate and distinctobligation of the contractor, and should notbe confused with the contractor’s warrantyobligation.

Subcontractors.

3.3.3 The Contractor shall be responsi-ble for inspection of portions of Workalready performed to determine thatsuch portions are in proper condition toreceive subsequent Work.

3.4 LABOR AND MATERIALS 3.4.1 Unless otherwise provided in theContract Documents, the Contractorshall provide and pay for labor, materi-als, equipment, tools, constructionequipment and machinery, water, heat,utilities, transportation, and other facili-ties and services necessary for properexecution and completion of the Work,whether temporary or permanent andwhether or not incorporated or to beincorporated in the Work.

3.4.2 The Contractor may make sub-stitutions only with the consent of theOwner, after evaluation by the Architectand in accordance with a Change Order.

3.4.3 The Contractor shall enforcestrict discipline and good order amongthe Contractor's employees and otherpersons carrying out the Contract. TheContractor shall not permit employmentof unfit persons or persons not skilled intasks assigned to them.

3.5 WARRANTY 3.5.1 The Contractor warrants to theOwner and Architect that materials andequipment furnished under the Contractwill be of good quality and new unlessotherwise required or permitted by theContract Documents, that the Work willbe free from defects not inherent in thequality required or permitted, and thatthe Work will conform to the require-ments of the Contract Documents. Work

22 A201 Commentary


If the owner is a tax-exempt organizationand intends to have its tax exemption applyto the contractor’s work, this subparagraphwill need to be modified.

Under Subparagraph 2.2.2, the owner payscosts associated with approvals and per-mits obtained before execution of the con-tract that relate to project feasibility (e.g.,zoning, environmental impact, and the like).

not conforming to these requirements,including substitutions not properlyapproved and authorized, may be consid-ered defective. The Contractor's warran-ty excludes remedy for damage or defectcaused by abuse, modifications not exe-cuted by the Contractor, improper orinsufficient maintenance, improper oper-ation, or normal wear and tear and nor-mal usage. If required by the Architect,the Contractor shall furnish satisfactoryevidence as to the kind and quality ofmaterials and equipment.

3.6 TAXES3.6.1 The Contractor shall pay sales,consumer, use and similar taxes forthe Work provided by the Contractorwhich are legally enacted when bids arereceived or negotiations concluded,whether or not yet effective or merelyscheduled to go into effect.

3.7 PERMITS, FEES ANDNOTICES3.7.1 Unless otherwise provided in theContract Documents, the Contractorshall secure and pay for the building per-mit and other permits and governmentalfees, licenses and inspections necessaryfor proper execution and completion ofthe Work which are customarilysecured after execution of theContract and which are legally requiredwhen bids are received or negotiationsconcluded.

3.7.2 The Contractor shall complywith and give notices required by laws,ordinances, rules, regulations and lawfulorders of public authorities applicable toperformance of the Work.

3.7.3 It is not the Contractor'sresponsibility to ascertain that the

A201 Commentary 23


Ordinarily, the contractor does not partici-pate in the creation of the contract docu-ments. For this reason, the contractor is notresponsible for their failure to comply withapplicable law (including building codes)unless the contractor knows of such failureand fails to report it as required in this sub-paragraph (see Subparagraph 3.7.4,below). If the project is the personal resi-dence of the owner, however, statutes insome jurisdictions may supersedeSubparagraph 3.7.3 and require the con-tractor to assume responsibility for compli-ance with building codes.

Allowances are customarily used as anaccounting device with regard to materialsand equipment whose selection and costcannot be determined precisely at the timethe original bid or proposal is submitted.This could occur because the finish or levelof quality has not been finally selected orbecause of variations expected to occurafter bidding.

The owner has the right to decide who shallsupply items covered by allowances. Thecontractor, however, is not required toemploy persons or entities to whom it rea-sonably objects. Once employed, subcon-tractors under this provision have an identicalstatus to those selected directly by the con-tractor.

Contract Documents are in accordancewith applicable laws, statutes, ordi-nances, building codes, and rules andregulations. However, if the Contractorobserves that portions of the ContractDocuments are at variance therewith, theContractor shall promptly notify theArchitect and Owner in writing, and nec-essary changes shall be accomplished byappropriate Modification.

3.7.4 If the Contractor performs Workknowing it to be contrary to laws,statutes, ordinances, building codes, andrules and regulations without such noticeto the Architect and Owner, theContractor shall assume appropriateresponsibility for such Work and shallbear the costs attributable to correction.

3.8 ALLOWANCES3.8.1 The Contractor shall include inthe Contract Sum all allowances stated inthe Contract Documents. Items coveredby allowances shall be supplied for suchamounts and by such persons or entitiesas the Owner may direct, but theContractor shall not be required toemploy persons or entities to whom theContractor has reasonable objection.

3.8.2 Unless otherwise provided in theContract Documents:.1 allowances shall cover the cost tothe Contractor of materials and equip-ment delivered at the site and all requiredtaxes, less applicable trade discounts;.2 Contractor's costs for unload-ing and handling at the site, labor,installation costs, overhead, profit andother expenses contemplated for stated

24 A201 Commentary


The contractor’s overhead costs—those notspecifically attributable to the items coveredby the allowance—are excluded from theallowance, but are to be included in the con-tract sum. For example, if it is known that1,000 square yards of carpet must beinstalled, costs for unloading and handling,installation and other expenses can be cal-culated. Given the allowance amount, over-head and profit can also be calculated. All ofthose elements are already included in thecontract sum. The only unknown is the costof the carpet itself, and that is the allowancefigure.

A superintendent cannot build a projectalone, but an incompetent superintendentcan single-handedly ruin one. For that rea-son, the owner and architect must insist thatthe contractor be a competent and experi-enced superintendent. As obvious as thismight seem, contractors, construction man-agers and program managers who brokerprojects and use skeletal staffing are oftenthe one’s most likely to ignore the impor-tance of the superintendent’s function, leav-ing a project’s details to their subcontractorsor to the architect.

The contractor’s construction schedule is forthe information of the owner and architectrather than for their approval. This is consis-tent with the concept that the contractor issolely responsible for the sequence andprogress of the work.

Division 1 of the specifications may specifythe number of days allowed to prepare theschedule, its format or specific datarequired to demonstrate a realistic, expedi-tious plan for completing the work within theparameters of the contract documents.

allowance amounts shall be includedin the Contract Sum but not in theallowances;.3 whenever costs are more than orless than allowances, the Contract Sumshall be adjusted accordingly by ChangeOrder. The amount of the Change Ordershall reflect (1) the difference betweenactual costs and the allowances underClause 3.8.2.1 and (2) changes inContractor's costs under Clause 3.8.2.2.

3.8.3 Materials and equipment under anallowance shall be selected by theOwner in sufficient time to avoid delayin the Work.

3.9 SUPERINTENDENT 3.9.1 The Contractor shall employ acompetent superintendent and neces-sary assistants who shall be in attendanceat the Project site during performance ofthe Work. The superintendent shall rep-resent the Contractor, and communica-tions given to the superintendent shall beas binding as if given to the Contractor.Important communications shall be con-firmed in writing. Other communicationsshall be similarly confirmed on writtenrequest in each case.

3.10 CONTRACTOR'S CONSTRUCTION SCHEDULES3.10.1 The Contractor, promptly afterbeing awarded the Contract, shall pre-pare and submit for the Owner's andArchitect's information a Contractor'sconstruction schedule for the Work. Theschedule shall not exceed time limitscurrent under the Contract Documents,shall be revised at appropriate intervalsas required by the conditions of the Workand Project, shall be related to the entireProject to the extent required by theContract Documents, and shall provide

A201 Commentary 25


The architect has the right to approve or dis-approve of the contractor’s planned sched-ule of submittals. This gives the architectand contractor the opportunity to agree onand coordinate their respective roles withthe timing of submittals so as to allow timefor adequate review.

The contractor, as the party responsible forthe actual construction, is in the best posi-tion to prepare a permanent record of theproject for ultimate submittal through thearchitect to the owner. This record consistsof record documents, and the detailedrequirements for them should be included inthe technical sections of division 1 of thespecifications.

Shop drawings are not generic and shouldnot simply be preprinted manufacturers’ dia-grams.

for expeditious and practicable executionof the Work.

3.10.2 The Contractor shall prepare andkeep current, for the Architect'sapproval, a schedule of submittalswhich is coordinated with theContractor's construction schedule andallows the Architect reasonable time toreview submittals.

3.10.3 The Contractor shall perform theWork in general accordance with themost recent schedules submitted to theOwner and Architect.

3.11 DOCUMENTS AND SAMPLES AT THE SITE3.11.1 The Contractor shall maintain atthe site for the Owner one record copy ofthe Drawings, Specifications, Addenda,Change Orders and other Modifications,in good order and marked currently torecord field changes and selectionsmade during construction, and onerecord copy of approved ShopDrawings, Product Data, Samples andsimilar required submittals. These shallbe available to the Architect and shall bedelivered to the Architect for submittal tothe Owner upon completion of the Work.

3.12 SHOP DRAWINGS, PRODUCT DATA AND SAMPLES3.12.1 Shop Drawings are drawings,diagrams, schedules and other data spe-cially prepared for the Work by theContractor or a Subcontractor, Sub-sub-contractor, manufacturer, supplier or dis-tributor to illustrate some portion of theWork. 3.12.2 Product Data are illustrations,standard schedules, performancecharts, instructions, brochures, dia-grams and other information furnished

26 A201 Commentary


Product data are usually taken from cata-logs and other materials supplied by manu-facturers for their standard products.Generally, they are not specially preparedfor the project, but are often marked to high-light the specific model or style of productthat will be used on the project.

Administrative procedures for handlingthese submittals should be included in divi-sion 1 of the specifications.

The purpose of these submittals is to illus-trate how the contractor intends to imple-ment the architect’s design. Because theowner may not have the opportunity toagree with changes incorporated into shopdrawings, product data or samples, the sub-mittals from the contractor to the architectcannot represent the mutual agreement ofthe parties to the same degree as the con-tract documents.

Occasionally, shop drawings, product data,samples or other submittals will be sent tothe architect as a matter of routine eventhough the contract documents do notrequire them. In that event, an architect isnot obliged to review or take other actionwith regard to them.

The contractor is to assemble shop draw-ings and other required submittals fromsubcontractors and others, coordinate andreview the submittals and, if they are foundto be proper, mark them “approved” beforesubmitting them to the architect.Subcontractors, sub-subcontractors andothers should not send submittals directly tothe architect.

by the Contractor to illustrate materialsor equipment for some portion of theWork.

3.12.3 Samples are physical exampleswhich illustrate materials, equipment orworkmanship and establish standards bywhich the Work will be judged.

3.12.4 Shop Drawings, Product Data,Samples and similar submittals arenot Contract Documents. The purposeof their submittal is to demonstrate forthose portions of the Work for whichsubmittals are required by the ContractDocuments the way by which theContractor proposes to conform to theinformation given and the design con-cept expressed in the ContractDocuments. Review by the Architect issubject to the limitations ofSubparagraph 4.2.7. Informational sub-mittals upon which the Architect is notexpected to take responsive action maybe so identified in the ContractDocuments. Submittals which are notrequired by the Contract Documentsmay be returned by the Architectwithout action.

3.12.5 The Contractor shall review forcompliance with the ContractDocuments, approve and submit to theArchitect Shop Drawings, Product Data,Samples and similar submittals requiredby the Contract Documents with reason-able promptness and in such sequence asto cause no delay in the Work or in theactivities of the Owner or of separatecontractors. Submittals which are notmarked as reviewed for compliance withthe Contract Documents and approvedby the Contractor may be returned by theArchitect without action.

A201 Commentary 27


The owner’s agreement with the contractoris based upon mutual agreement as memo-rialized in the contract documents. Shopdrawings, product data, samples and othersubmittals do not modify that agreement. Toavoid confusion, the contractor and archi-tect are required to document any intendedchange in the contract documents whichresults from the shop drawing process.

3.12.6 By approving and submittingShop Drawings, Product Data, Samplesand similar submittals, the Contractorrepresents that the Contractor has deter-mined and verified materials, field mea-surements and field construction criteriarelated thereto, or will do so, and haschecked and coordinated the informationcontained within such submittals withthe requirements of the Work and of theContract Documents.

3.12.7 The Contractor shall perform noportion of the Work for which theContract Documents require submittaland review of Shop Drawings, ProductData, Samples or similar submittals untilthe respective submittal has beenapproved by the Architect.

3.12.8 The Work shall be in accordancewith approved submittals except that theContractor shall not be relieved ofresponsibility for deviations fromrequirements of the ContractDocuments by the Architect'sapproval of Shop Drawings, ProductData, Samples or similar submittalsunless the Contractor has specificallyinformed the Architect in writing of suchdeviation at the time of submittal and (1)the Architect has given written approvalto the specific deviation as a minorchange in the Work, or (2) a ChangeOrder or Construction Change Directivehas been issued authorizing the devia-tion. The Contractor shall not be relievedof responsibility for errors or omissionsin Shop Drawings, Product Data,Samples or similar submittals by theArchitect's approval thereof.

3.12.9 The Contractor shall direct spe-cific attention, in writing or on resubmit-ted Shop Drawings, Product Data,

28 A201 Commentary


If a submittal has been returned to the con-tractor for correction and resubmission, it islikely that the architect will check only previ-ously noted items to see if they have beencorrected. Therefore, this provision requiresthe contractor to call specific attention toother changes, if any, from the previoussubmission. The architect can then quicklyreview such new information.

Design services may only be required of thecontractor if such requirements are con-tained in the contract documents, eitherspecifically (in the form of performancespecifications, for example) or as part of thecontractor's responsibility for constructionmeans and methods.

Such requirements are often referred to as"design delegation," but the architect has nocontractual relationship with the contractorand cannot delegate to the contractor. Whattakes place is, in fact, a form of design allo-cation by the owner, who can realize sub-stantial savings through the adaptation bythe contractor of standard sub-assemblies.For example, the routing of sprinkler sys-tems is usually handled by the contractor,who is then free to select the most econom-ical method to install the system and to inte-grate it into other building components.

While such criteria will commonly be devel-oped by the architect or architect's consul-tants, the owner or outside consultants ofthe owner may also be involved.

The person providing design services onbehalf of the contractor must be licensed inthe jurisdiction in which the project is locat-ed.

Samples or similar submittals, to revi-sions other than those requested bythe Architect on previous submittals.In the absence of such written notice theArchitect's approval of a resubmissionshall not apply to such revisions.

3.12.10 The Contractor shall not berequired to provide professional serviceswhich constitute the practice of architec-ture or engineering unless such servicesare specifically required by theContract Documents for a portion ofthe Work or unless the Contractorneeds to provide such services in orderto carry out the Contractor's responsi-bilities for construction means, meth-ods, techniques, sequences and proce-dures. The Contractor shall not berequired to provide professional servicesin violation of applicable law. If profes-sional design services or certifications bya design professional related to systems,materials or equipment are specificallyrequired of the Contractor by theContract Documents, the Owner andthe Architect will specify all perfor-mance and design criteria that suchservices must satisfy. The Contractorshall cause such services or certificationsto be provided by a properly licenseddesign professional, whose signatureand seal shall appear on all drawings,calculations, specifications, certifica-tions, Shop Drawings and other submit-tals prepared by such professional. ShopDrawings and other submittals related tothe Work designed or certified by suchprofessional, if prepared by others, shallbear such professional's writtenapproval when submitted to theArchitect. The Owner and the Architectshall be entitled to rely upon the adequa-

A201 Commentary 29


Submittals relating to work designed or cer-tified by an architect or engineer retained onbehalf of the contractor must be approvedby that professional, just as the architectapproves submittals relating to the archi-tect’s own work.

cy, accuracy and completeness of the ser-vices, certifications or approvals per-formed by such design professionals,provided the Owner and Architect havespecified to the Contractor all perfor-mance and design criteria that such ser-vices must satisfy. Pursuant to thisSubparagraph 3.12.10, the Architect willreview, approve or take other appropriateaction on submittals only for the limitedpurpose of checking for conformancewith information given and the designconcept expressed in the ContractDocuments. The Contractor shall not beresponsible for the adequacy of the per-formance or design criteria required bythe Contract Documents.

3.13 USE OF SITE3.13.1 The Contractor shall confineoperations at the site to areas permittedby law, ordinances, permits and theContract Documents and shall not unrea-sonably encumber the site with materialsor equipment.

3.14 CUTTING AND PATCHING3.14.1 The Contractor shall be responsi-ble for cutting, fitting or patchingrequired to complete the Work or tomake its parts fit together properly.

3.14.2 The Contractor shall not damageor endanger a portion of the Work orfully or partially completed constructionof the Owner or separate contractors bycutting, patching or otherwise alteringsuch construction, or by excavation. TheContractor shall not cut or otherwisealter such construction by the Owner or aseparate contractor except with writtenconsent of the Owner and of such sepa-rate contractor; such consent shall not beunreasonably withheld. The Contractorshall not unreasonably withhold from the

30 A201 Commentary


This includes work in progress at locationsother than the project site.

Royalties and license fees are part of thecost of construction and are thus properlyincluded in the contract sum.

Owner or a separate contractor theContractor's consent to cutting or other-wise altering the Work.

3.15 CLEANING UP3.15.1 The Contractor shall keep thepremises and surrounding area free fromaccumulation of waste materials or rub-bish caused by operations under theContract. At completion of the Work, theContractor shall remove from and aboutthe Project waste materials, rubbish, theContractor's tools, construction equip-ment, machinery and surplus materials.

3.15.2 If the Contractor fails to clean upas provided in the Contract Documents,the Owner may do so and the cost there-of shall be charged to the Contractor.

3.16 ACCESS TO WORK 3.16.1 The Contractor shall provide theOwner and Architect access to the Workin preparation and progress whereverlocated.

3.17 ROYALTIES, PATENTS ANDCOPYRIGHTS3.17.1 The Contractor shall pay all roy-alties and license fees. The Contractorshall defend suits or claims for infringe-ment of copyrights and patent rights andshall hold the Owner and Architectharmless from loss on account thereof,but shall not be responsible for suchdefense or loss when a particular design,process or product of a particular manu-facturer or manufacturers is required bythe Contract Documents or where thecopyright violations are contained inDrawings, Specifications or other docu-ments prepared by the Owner orArchitect. However, if the Contractor hasreason to believe that the requireddesign, process or product is an infringe-

A201 Commentary 31


In many jurisdictions, anti-indemnificationstatutes limit the validity and enforceabilityof indemnification provisions in contracts.Most prohibit only broad-form indemnifica-tion (requiring indemnification for the indem-nitee's sole negligence). This subparagraphcontains a narrow-form of indemnification,under which the indemnitor's obligation onlycovers the indemnitee's losses to the extentcaused by the indemnitor or one for whoseacts the indemnitor is responsible. Thestatutes and the courts' interpretations ofsurety provisions vary, and for this reasonSubparagraph 3.18.1 should be reviewed bylegal counsel.

Many losses which might otherwise giverise to claims for indemnification are cov-ered by Project Management ProtectiveLiability insurance, if such a policy is ineffect for the project.

This provision does not cover injury or dam-age to the work itself nor does it cover aclaim by the owner that the contractor hasfailed to construct the building according tothe contract documents.

The contractor's obligation to indemnify istriggered by an act or omission of the con-tractor or one of the contractor's agents oremployees, and covers the indemnitee'sloss only to the extent that it was caused bysuch act or omission. This is comparativefault language: for example, if the indemni-tee and all other third parties are found to be20 percent responsible, the contractor'sobligation to indemnify would extend to 80percent of the loss.

In some jurisdictions, indemnification mayalso be available under applicable law. Thissentence makes it clear that Paragraph 3.18is not meant to limit such relief.

ment of a copyright or a patent, theContractor shall be responsible for suchloss unless such information is promptlyfurnished to the Architect.

3.18 INDEMNIFICATION3.18.1 To the fullest extent permitted bylaw and to the extent claims, damages,losses or expenses are not covered byProject Management ProtectiveLiability insurance purchased by theContractor in accordance withParagraph 11.3, the Contractor shallindemnify and hold harmless the Owner,Architect, Architect's consultants, andagents and employees of any of themfrom and against claims, damages, loss-es and expenses, including but not limit-ed to attorneys' fees, arising out of orresulting from performance of the Work,provided that such claim, damage, lossor expense is attributable to bodilyinjury, sickness, disease or death, or toinjury to or destruction of tangible prop-erty (other than the Work itself), butonly to the extent caused by the negli-gent acts or omissions of theContractor, a Subcontractor, anyonedirectly or indirectly employed bythem or anyone for whose acts theymay be liable, regardless of whether ornot such claim, damage, loss or expenseis caused in part by a party indemnifiedhereunder. Such obligation shall not beconstrued to negate, abridge, orreduce other rights or obligations ofindemnity which would otherwiseexist as to a party or person describedin this Paragraph 3.18.

3.18.2 In claims against any person orentity indemnified under this Paragraph3.18 by an employee of the Contractor, aSubcontractor, anyone directly or indi-

32 A201 Commentary


It is not unusual for an injured worker toseek redress from the owner or architect,since statutory compensation awards aretypically rather low. This subparagraphmakes it clear that such compensationawards should not be construed to limit thecontractor's indemnity obligation to the pay-ment of statutory compensation in the eventthe owner or architect is found liable foraccidents due to the contractor's negli-gence.

In most states, the title architect may onlybe used by persons lawfully licensed topractice architecture in that state, and byentities controlled by such persons. Theform of such entities (for example, corpora-tions) may be restricted as well.

Ordinarily, the related owner-architectagreement requires the architect to provideadministration of the construction contractas set forth in AIA Document A201-1997. Achange in contract administration serviceswould thus require modification of theowner-architect agreement as well.

rectly employed by them or anyone forwhose acts they may be liable, theindemnification obligation underSubparagraph 3.18.1 shall not be lim-ited by a limitation on amount or typeof damages, compensation or benefitspayable by or for the Contractor or aSubcontractor under workers' com-pensation acts, disability benefit actsor other employee benefit acts.

ARTICLE 4 ADMINISTRATION OFTHE CONTRACT

4.1 ARCHITECT4.1.1 The Architect is the person law-fully licensed to practice architecture oran entity lawfully practicing architectureidentified as such in the Agreement andis referred to throughout the ContractDocuments as if singular in number. Theterm "Architect" means the Architect orthe Architect's authorized representative.

4.1.2 Duties, responsibilities and limita-tions of authority of the Architect as setforth in the Contract Documents shallnot be restricted, modified or extendedwithout written consent of the Owner,Contractor and Architect. Consentshall not be unreasonably withheld.

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The word administration is not intended toimply that the architect either supervises ordirects the construction effort.

If, under the owner-architect agreement, thearchitect will not be providing full construc-tion contract administration as described inthis article and elsewhere in AIA DocumentA201-1997, the relevant provisions must bemodified accordingly.

The architect’s duty to provide administra-tion of the construction contract terminateswhen final payment to the contractor is due(whether or not it is actually made on time),unless the owner chooses to retain thearchitect’s services during the one-year cor-rection period.

The architect is not the general agent of theowner. The architect’s powers are thoseenumerated in the contract documents, andthe contractor should not rely on actions ofthe architect beyond the scope of thosepowers.

4.2 ARCHITECT'S ADMINISTRATION OF THE CONTRACT 4.2.1 The Architect will provide admin-istration of the Contract as described inthe Contract Documents, and will bean Owner's representative (1) duringconstruction, (2) until final payment isdue and (3) with the Owner's concur-rence, from time to time during the one-year period for correction of Workdescribed in Paragraph 12.2. TheArchitect will have authority to act onbehalf of the Owner only to the extentprovided in the Contract Documents,unless otherwise modified in writing inaccordance with other provisions of theContract.

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This requirement does not imply any defi-nite time interval between site visits.Instead, intervals are related to projectrequirements, as determined by the archi-tect in the architect’s professional judgment.The architect’s professional judgment isalso the gauge of the number of visitsrequired, unless a specific number is statedin the owner-architect agreement.

The architect is not required to be at the sitefull-time or to make detailed inspections,and in any case is not empowered to directthe contractor’s workers or subcontractors.Site visits are intended to permit review ofthe contractor’s work and to give the archi-tect a basis for reporting to the owner.

Historial note. The eighth edition of A201(1961) deleted the term supervision, whichhad been misinterpreted by certain courts,and clarified the architect’s role by using theterm observation.

This language underscores the statement ofthe contractor’s responsibilities inSubparagraph 3.3.1 and reinforces thedividing line between the contractor’sresponsibilities and those of the architect. Aclear allocation of responsibility is in theinterests of all participants in the construc-tion project. Note, however, that the archi-tect must take care not to alter this divisionof responsibility through conduct—for exam-ple, by giving instructions to the contractor’semployees at the site regarding safety pro-cedures.

Specific instructions in the contract docu-ments regarding construction means, meth-ods, techniques, sequences or procedurestrigger an exception contained inSubparagraph 3.3.1, under which the con-tractor is required to perform an evaluationof jobsite safety.

4.2.2 The Architect, as a representativeof the Owner, will visit the site at inter-vals appropriate to the stage of theContractor’s operations (1) to becomegenerally familiar with and to keep theOwner informed about the progressand quality of the portion of the Workcompleted, (2) to endeavor to guardthe Owner against defects and defi-ciencies in the Work, and (3) to deter-mine in general if the Work is beingperformed in a manner indicating thatthe Work, when fully completed, willbe in accordance with the ContractDocuments. However, the Architect willnot be required to make exhaustive orcontinuous on-site inspections to checkthe quality or quantity of the Work. TheArchitect will neither have controlover or charge of, nor be responsiblefor, the construction means, methods,techniques, sequences or procedures,or for the safety precautions and pro-grams in connection with the Work,since these are solely the Contractor’srights and responsibilities under theContract Documents, except as provid-ed in Subparagraph 3.3.1.

4.2.3 The Architect will not be respon-sible for the Contractor’s failure to per-form the Work in accordance with therequirements of the ContractDocuments. The Architect will not havecontrol over or charge of and will not beresponsible for acts or omissions of theContractor, Subcontractors, or theiragents or employees, or any other per-sons or entities performing portions ofthe Work.

4.2.4 Communications Facilitating

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Only work that conforms to the require-ments of the contract documents and therepresentations on the application will becertified for payment. This involves thearchitect’s professional determination andgoes beyond merely transmitting applica-tions for payment to the owner.

The authority to reject work is one of theprincipal means at the architect’s disposalfor guarding the owner against defects anddeficiencies in the contractor’s work. Othermeans are the authority to require specialtesting and inspections underSubparagraph 13.5.4, and the authority towithhold or nullify certification for paymentunder Subparagraph 9.5.1. Note that whilethe architect has authority to reject work,only the owner may order the contractor tostop work under Subparagraph 2.3.1.

Historical note. Due to legal interpretationsthat were widely believed to subject archi-tects to unwarranted liability, a provisionallowing the architect to stop the work wasdeleted in the twelfth edition of A201 (1970).That provision previously enabled the archi-tect to prevent construction of further defec-tive work by ordering the contractor to stopworking. However, some courts determinedthat such a right implied a duty of the archi-tect to anticipate defects in construction thatmight subsequently result in injury, and touse this power to stop the work before thathappened. This was contrary to the intend-ed result that the contractor be solelyresponsible for safety at the site.

Contract Administration. Except asotherwise provided in the ContractDocuments or when direct communica-tions have been specially authorized, theOwner and Contractor shall endeavor tocommunicate with each other throughthe Architect about matters arising out ofor relating to the Contract.Communications by and with theArchitect's consultants shall be throughthe Architect. Communications by andwith Subcontractors and material suppli-ers shall be through the Contractor.Communications by and with separatecontractors shall be through the Owner.

4.2.5 Based on the Architect's evalua-tions of the Contractor's Applications forPayment, the Architect will review andcertify the amounts due theContractor and will issue Certificatesfor Payment in such amounts.

4.2.6 The Architect will have authorityto reject Work that does not conform tothe Contract Documents. Whenever theArchitect considers it necessary or advis-able, the Architect will have authority torequire inspection or testing of the Workin accordance with Subparagraphs13.5.2 and 13.5.3, whether or not suchWork is fabricated, installed or complet-ed. However, neither this authority of theArchitect nor a decision made in goodfaith either to exercise or not to exercisesuch authority shall give rise to a duty orresponsibility of the Architect to theContractor, Subcontractors, material andequipment suppliers, their agents oremployees, or other persons or entitiesperforming portions of the Work.

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Appropriate action may include instructionsto correct a submittal and resubmit it.

In a letter of transmittal accompanying areturn of shop drawings to the contractor, oron the shop drawing stamp, the architectmight point out that review and approval ofshop drawings, product data or samplesdoes not indicate approval of changes in thecontract sum or contract time. Thesechanges can be authorized only as providedin Article 7, Changes in the Work.

Shop drawings, product data and samplesare not contract documents. They representthe contractor’s intentions for implementingthe requirements of the contract documents.Architects, therefore, review them only forthe limited purposes stated.

No specific interval is established withinwhich the architect must review and act onsubmittals. The important factors to be bal-anced are “with such reasonable prompt-ness as to cause no delay” and “while allow-ing sufficient time…to permit adequatereview.” Prompt review by the architect helpsavoid claims for delay under Paragraph 8.3.

4.2.7 The Architect will review andapprove or take other appropriateaction upon the Contractor's submittalssuch as Shop Drawings, Product Dataand Samples, but only for the limitedpurpose of checking for conformancewith information given and the designconcept expressed in the ContractDocuments. The Architect's action willbe taken with such reasonable prompt-ness as to cause no delay in the Workor in the activities of the Owner,Contractor or separate contractors,while allowing sufficient time in theArchitect's professional judgment topermit adequate review. Review ofsuch submittals is not conducted for thepurpose of determining the accuracy andcompleteness of other details such asdimensions and quantities, or for sub-stantiating instructions for installation orperformance of equipment or systems,all of which remain the responsibility ofthe Contractor as required by theContract Documents. The Architect'sreview of the Contractor's submittalsshall not relieve the Contractor of theobligations under Paragraphs 3.3, 3.5and 3.12. The Architect's review shall notconstitute approval of safety precautionsor, unless otherwise specifically statedby the Architect, of any constructionmeans, methods, techniques, sequencesor procedures. The Architect's approvalof a specific item shall not indicateapproval of an assembly of which theitem is a component.

4.2.8 The Architect will prepare ChangeOrders and Construction ChangeDirectives, and may authorize minorchanges in the Work as provided inParagraph 7.4.

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Inspections are distinct from normal site vis-its. The inspections described here are theonly ones the architect performs unless oth-ers are specifically provided for in the con-tract documents, required pursuant toSubparagraph 13.5.1, or otherwise agreedto by the owner and architect.

Final completion and final payment are cov-ered in Paragraph 9.10.

The exhibit should not expand the archi-tect’s responsibilities unless the owner-architect agreement is appropriately modi-fied.

Because the architect has prepared thedrawings and specifications, has participat-ed in preparation of the other contract doc-uments, and is actively engaged in adminis-tering the construction contract, the archi-tect is uniquely qualified to render initialdecisions on the requirements of the con-tract.

The 15-day period stated here should notbe confused with the time periods applica-ble to the architect’s decisions on claims(see Subparagraphs 4.4.1 and 4.5.1).

4.2.9 The Architect will conduct inspec-tions to determine the date or dates ofSubstantial Completion and the dateof final completion, will receive andforward to the Owner, for the Owner'sreview and records, written warrantiesand related documents required by theContract and assembled by theContractor, and will issue a finalCertificate for Payment upon compli-ance with the requirements of theContract Documents.

4.2.10 If the Owner and Architect agree,the Architect will provide one or moreproject representatives to assist in carry-ing out the Architect's responsibilities atthe site. The duties, responsibilities andlimitations of authority of such projectrepresentatives shall be as set forth in anexhibit to be incorporated in theContract Documents.

4.2.11 The Architect will interpret anddecide matters concerning perfor-mance under, and requirements of, theContract Documents on written requestof either the Owner or Contractor. TheArchitect's response to such requests willbe made in writing within any time lim-its agreed upon or otherwise with rea-sonable promptness. If no agreement ismade concerning the time within whichinterpretations required of the Architectshall be furnished in compliance withthis Paragraph 4.2, then delay shall notbe recognized on account of failure bythe Architect to furnish such interpreta-tions until 15 days after writtenrequest is made for them.

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In most jurisdictions, the law provides forsuch immunity even in the absence of thislanguage.

The word initiated underscores the fact thatnotice of a claim need not contain all theinformation pertaining to the claim.

4.2.12 Interpretations and decisions ofthe Architect will be consistent with theintent of and reasonably inferable fromthe Contract Documents and will be inwriting or in the form of drawings.When making such interpretationsand initial decisions, the Architect willendeavor to secure faithful perfor-mance by both Owner andContractor, will not show partiality toeither and will not be liable for resultsof interpretations or decisions so ren-dered in good faith.

4.2.13 The Architect's decisions on mat-ters relating to aesthetic effect will befinal if consistent with the intentexpressed in the Contract Documents.

4.3 CLAIMS AND DISPUTES4.3.1 Definition. A Claim is a demand orassertion by one of the parties seeking,as a matter of right, adjustment or inter-pretation of Contract terms, payment ofmoney, extension of time or other reliefwith respect to the terms of the Contract.The term "Claim" also includes otherdisputes and matters in question betweenthe Owner and Contractor arising out ofor relating to the Contract. Claims mustbe initiated by written notice. Theresponsibility to substantiate Claimsshall rest with the party making theClaim.

4.3.2 Time Limits on Claims. Claimsby either party must be initiated within21 days after occurrence of the event giv-ing rise to such Claim or within 21 daysafter the claimant first recognizes thecondition giving rise to the Claim,

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This is intended to mitigate damages thatmight otherwise be waived by both partiesbecause it avoids the expense of shuttingdown the project and later restarting it. Theexceptions cover situations justifying sus-pension or termination.

This covers physical conditions not specifi-cally addressed in the contract documents,but those that differ materially from condi-tions that might reasonably be assumed toexist at the site. For example, the actualbedrock encountered may fracture muchmore readily than is typical and expected forthat type of rock, or a concealed structuremay include iron connections when onlywood joints were expected. If deviation ismaterial to the required work, a claim wouldbe allowable.

The observing party must give notice beforedisturbing the conditions and within 21 daysof first observing them in order to give thearchitect the opportunity to investigate theconditions.

Changed conditions may result in either anincrease or decrease in the contract sum orcontract time. Owners as well as contractorsmay take advantage of these provisions ifcircumstances so warrant.

whichever is later. Claims must be initi-ated by written notice to the Architectand the other party.

4.3.3 Continuing ContractPerformance. Pending final resolutionof a Claim except as otherwise agreed inwriting or as provided in Subparagraph9.7.1 and Article 14, the Contractor shallproceed diligently with performance ofthe Contract and the Owner shall contin-ue to make payments in accordance withthe Contract Documents.

4.3.4 Claims for Concealed orUnknown Conditions. If conditions areencountered at the site which are (1) sub-surface or otherwise concealed physicalconditions which differ materially fromthose indicated in the ContractDocuments or (2) unknown physicalconditions of an unusual nature, whichdiffer materially from those ordinarilyfound to exist and generally recognizedas inherent in construction activities ofthe character provided for in the ContractDocuments, then notice by the observingparty shall be given to the other partypromptly before conditions are dis-turbed and in no event later than 21days after first observance of the con-ditions. The Architect will promptlyinvestigate such conditions and, if theydiffer materially and cause an increase ordecrease in the Contractor's cost of, ortime required for, performance of anypart of the Work, will recommend anequitable adjustment in the ContractSum or Contract Time, or both. If theArchitect determines that the conditionsat the site are not materially differentfrom those indicated in the ContractDocuments and that no change in the

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Only delays impacting the critical path of thework entitles the contractor to additionaltime.

A delay can be continuing even if it is inter-rupted from time to time, provided it origi-nates from the same cause.

terms of the Contract is justified, theArchitect shall so notify the Owner andContractor in writing, stating the rea-sons. Claims by either party in opposi-tion to such determination must be madewithin 21 days after the Architect hasgiven notice of the decision. If the condi-tions encountered are materially differ-ent, the Contract Sum and Contract Timeshall be equitably adjusted, but if theOwner and Contractor cannot agree onan adjustment in the Contract Sum orContract Time, the adjustment shall bereferred to the Architect for initial deter-mination, subject to further proceedingspursuant to Paragraph 4.4.

4.3.5 Claims for Additional Cost. If theContractor wishes to make Claim for anincrease in the Contract Sum, writtennotice as provided herein shall be givenbefore proceeding to execute the Work.Prior notice is not required for Claimsrelating to an emergency endangeringlife or property arising under Paragraph10.6.

4.3.6 If the Contractor believes addition-al cost is involved for reasons includingbut not limited to (1) a written interpre-tation from the Architect, (2) an order bythe Owner to stop the Work where theContractor was not at fault, (3) a written 4.3.7 Claims for Additional Time4.3.7.1 If the Contractor wishes to makeClaim for an increase in the ContractTime, written notice as provided hereinshall be given. The Contractor's Claimshall include an estimate of cost and ofprobable effect of delay on progress ofthe Work. In the case of a continuingdelay only one Claim is necessary.

A201 Commentary 41


In general, this may be done through therecords of the National Oceanographic andAtmospheric Administration (NOAA). Forexample, four days of rain could make thesite impassable and unworkable for sevendays, or it could be irrelevant if all work isunder cover.

Unit prices are normally quoted in relation toanticipated quantities.

By waiving claims for consequential dam-ages, the owner and contractor limit them-selves to direct damages. This eliminatessome of the incentive to escalate claims andmay encourage settlement. Other contractson the project (such as the owner-architectagreement and the subcontracts) shouldinclude similar provisions so that other par-ties are not targeted for receipt of claimswaived between the owner and contractor.

4.3.7.2 If adverse weather conditions arethe basis for a Claim for additional time,such Claim shall be documented bydata substantiating that weather condi-tions were abnormal for the period oftime, could not have been reasonablyanticipated and had an adverse effect onthe scheduled construction.

4.3.8 Injury or Damage to Person orProperty. If either party to the Contractsuffers injury or damage to person orproperty because of an act or omission ofthe other party, or of others for whoseacts such party is legally responsible,written notice of such injury or damage,whether or not insured, shall be given tothe other party within a reasonable timenot exceeding 21 days after discovery.The notice shall provide sufficient detailto enable the other party to investigatethe matter.

4.3.9 If unit prices are stated in theContract Documents or subsequentlyagreed upon, and if quantities originallycontemplated are materially changed ina proposed Change Order orConstruction Change Directive so thatapplication of such unit prices to quanti-ties of Work proposed will cause sub-stantial inequity to the Owner orContractor, the applicable unit pricesshall be equitably adjusted.

4.3.10 Claims for ConsequentialDamages. The Contractor and Ownerwaive Claims against each other forconsequential damages arising out ofor relating to this Contract. This mutu-al waiver includes: .1 damages incurred by the Owner forrental expenses, for losses of use,income, profit, financing, business andreputation, and for loss of management

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Generally, all claims must be referred to thearchitect first—even if they involve allegederrors or omissions of the architect. Thearchitect, who is actively engaged in admin-istering the construction contract, is unique-ly positioned to render initial decisions onclaims. An exception is made for claims hav-ing to do with hazardous materials.

or employee productivity or of the ser-vices of such persons; and .2 damages incurred by theContractor for principal office expensesincluding the compensation of personnelstationed there, for losses of financing,business and reputation, and for loss ofprofit except anticipated profit arisingdirectly from the Work. This mutual waiver is applicable, with-out limitation, to all consequential dam-ages due to either party's termination inaccordance with Article 14. Nothingcontained in this Subparagraph 4.3.10shall be deemed to preclude an award ofliquidated direct damages, when applica-ble, in accordance with the requirementsof the Contract Documents.

4.4 RESOLUTION OF CLAIMSAND DISPUTES4.4.1 Decision of Architect. Claims,including those alleging an error oromission by the Architect but excludingthose arising under Paragraphs 10.3through 10.5, shall be referred initiallyto the Architect for decision. An initialdecision by the Architect shall berequired as a condition precedent tomediation, arbitration or litigation of allClaims between the Contractor andOwner arising prior to the date finalpayment is due, unless 30 days havepassed after the Claim has been referredto the Architect with no decision havingbeen rendered by the Architect. TheArchitect will not decide disputesbetween the Contractor and persons orentities other than the Owner.

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Depending on the nature and magnitude ofa claim against the contractor, it is possiblethat the surety would be willing and able tostep in to help the contractor resolve theproblem. This may help to mitigate potentialdamages to everyone’s benefit. No commu-nications to the surety should occur withoutconsultation with the owner’s legal counsel.

4.4.2 The Architect will review Claimsand within ten days of the receipt of theClaim take one or more of the followingactions: (1) request additional support-ing data from the claimant or a responsewith supporting data from the otherparty, (2) reject the Claim in whole or inpart, (3) approve the Claim, (4) suggest acompromise, or (5) advise the partiesthat the Architect is unable to resolvethe Claim if the Architect lacks suffi-cient information to evaluate the mer-its of the Claim or if the Architect con-cludes that, in the Architect's sole dis-cretion, it would be inappropriate forthe Architect to resolve the Claim.

4.4.3 In evaluating Claims, the Architectmay, but shall not be obligated to, con-sult with or seek information from eitherparty or from persons with specialknowledge or expertise who may assistthe Architect in rendering a decision.The Architect may request the Owner toauthorize retention of such persons at theOwner's expense.

4.4.4 If the Architect requests a party toprovide a response to a Claim or to fur-nish additional supporting data, suchparty shall respond, within ten days afterreceipt of such request, and shall eitherprovide a response on the requested sup-porting data, advise the Architect whenthe response or supporting data will befurnished or advise the Architect that nosupporting data will be furnished. Uponreceipt of the response or supportingdata, if any, the Architect will eitherreject or approve the Claim in whole orin part.

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Note the exception stated in Subparagraph4.2.13 and reiterated in Subparagraphs4.5.1 and 4.6.1: the architect’s decisions onmatters relating to aesthetic effect are notsubject to mediation and arbitration.

This clause establishes a mechanism forlimiting the time within which the architect’sdecision may be appealed to arbitration. Ifthe written decision so provides, the partieshave only 30 days to demand arbitration onthe claim or controversy following the archi-tect’s decision. Under these circumstances,if no demand for arbitration has been madewithin the specified time, the architect’sdecision becomes final and binds the ownerand contractor without further opportunityfor appeal.

Lien notice and filing deadlines may becomplied with regardless of the stage in theclaim process.

4.4.5 The Architect will approve orreject Claims by written decision, whichshall state the reasons therefore andwhich shall notify the parties of anychange in the Contract Sum or ContractTime or both. The approval or rejectionof a Claim by the Architect shall be finaland binding on the parties but subject tomediation and arbitration.

4.4.6 When a written decision of theArchitect states that (1) the decision isfinal but subject to mediation and arbi-tration and (2) a demand for arbitrationof a Claim covered by such decisionmust be made within 30 days after thedate on which the party making thedemand receives the final written deci-sion, then failure to demand arbitrationwithin said 30 days' period shall result inthe Architect's decision becoming finaland binding upon the Owner andContractor. If the Architect renders adecision after arbitration proceedingshave been initiated, such decision maybe entered as evidence, but shall notsupersede arbitration proceedings unlessthe decision is acceptable to all partiesconcerned.

4.4.7 Upon receipt of a Claim againstthe Contractor or at any time thereafter,the Architect or the Owner may, but isnot obligated to, notify the surety, if any,of the nature and amount of the Claim. Ifthe Claim relates to a possibility of aContractor's default, the Architect or theOwner may, but is not obligated to, noti-fy the surety and request the surety'sassistance in resolving the controversy.

4.4.8 If a Claim relates to or is the sub-ject of a mechanic’s lien, the partyasserting such Claim may proceed inaccordance with applicable law to

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Mediation may be thought of as assistednegotiation. A neutral mediator endeavorsto assist the parties in reaching a settle-ment, but has no authority to impose a set-tlement.

The architect’s decision on a claim is imme-diately subject to mediation. Mediation of aclaim may also be requested if 30 days havepassed with no decision by the architect.

Copies of the rules are available fromregional offices of the American ArbitrationAssociation or from the national office inNew York City.

The mediation and arbitration provisions aredrafted so as to work independently of oneanother. If Paragraph 4.6 is deleted, the stayprovided for in Subparagraph 4.5.2 appliesto litigation.

comply with the lien notice or filingdeadlines prior to resolution of the Claimby the Architect, by mediation or byarbitration.

4.5 MEDIATION4.5.1 Any Claim arising out of or relat-ed to the Contract, except Claims relat-ing to aesthetic effect and except thosewaived as provided for in Subparagraphs4.3.10, 9.10.4 and 9.10.5 shall, after ini-tial decision by the Architect or 30days after submission of the Claim tothe Architect, be subject to mediation asa condition precedent to arbitration orthe institution of legal or equitable pro-ceedings by either party.

4.5.2 The parties shall endeavor toresolve their Claims by mediation which,unless the parties mutually agree other-wise, shall be in accordance with theConstruction Industry MediationRules of the American ArbitrationAssociation currently in effect. Requestfor mediation shall be filed in writingwith the other party to the Contract andwith the American ArbitrationAssociation. The request may be madeconcurrently with the filing of a demandfor arbitration but, in such event, media-tion shall proceed in advance of arbitra-tion or legal or equitable proceedings,which shall be stayed pending mediationfor a period of 60 days from the date offiling, unless stayed for a longer periodby agreement of the parties or courtorder.

4.5.3 The parties shall share the medi-ator's fee and any filing fees equally. Themediation shall be held in the placewhere the Project is located, unlessanother location is mutually agreedupon. Agreements reached in mediation

46 A201 Commentary


If the architect has rendered a decision on aclaim, that decision is immediately subjectto arbitration. If no decision is forthcoming,however, the parties must wait 45 days fromthe date the claim was submitted to thearchitect before they can demand arbitra-tion, unless other conditions exist asdescribed in Subparagraph 4.3.2.

After a dispute has arisen, the parties maywish to settle it by litigation or an arbitrationprocedure other than the ConstructionIndustry Rules of the AAA. This, however,requires an amendment to the contract andcan be accomplished only by written mutualagreement.

shall be enforceable as settlement agree-ments in any court having jurisdictionthereof.

4.6 ARBITRATION4.6.1 Any Claim arising out of orrelated to the Contract, except Claimsrelating to aesthetic effect and exceptthose waived as provided for inSubparagraphs 4.3.10, 9.10.4 and 9.10.5,shall, after decision by the Architect or30 days after submission of the Claim tothe Architect, be subject to arbitration.Prior to arbitration, the parties shallendeavor to resolve disputes by media-tion in accordance with the provisions ofParagraph 4.5.

4.6.2 Claims not resolved by media-tion shall be decided by arbitrationwhich, unless the parties mutuallyagree otherwise, shall be in accordancewith the Construction IndustryArbitration Rules of the AmericanArbitration Association currently ineffect. The demand for arbitration shallbe filed in writing with the other party tothe Contract and with the AmericanArbitration Association, and a copy shallbe filed with the Architect.

4.6.3 A demand for arbitration shall bemade within the time limits specified inSubparagraphs 4.4.6 and 4.6.1 as applic-able, and in other cases within a reason-able time after the Claim has arisen, andin no event shall it be made after the datewhen institution of legal or equitableproceedings based on such Claim wouldbe barred by the applicable statute oflimitations as determined pursuant toParagraph 13.7.

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The architect, owner, contractor, and personor entity to be joined must all agree in writ-ing before the architect or architect’semployees or consultants can be joined inan owner-contractor arbitration or have theirarbitrations joined with the owner-contractorarbitration. If there is agreement to consoli-date arbitrations or to be joined to one inprogress, such agreement is to apply only tothe specified case and is not meant to begenerally applicable to other or future dis-putes. Additionally, joinder of other peopleor entities (such as subcontractors) or con-solidation of their arbitration proceedingswill not be allowed unless such other peopleor entities are substantially involved in theowner-contractor dispute and, in fact, mustbe involved for the arbitrators to grant com-plete relief.

Language limiting or specifically prohibitingjoinder of parties or consolidation of arbitra-tions is included in all AIA documents hav-ing arbitration clauses. This helps to keepissues simpler for the arbitrators. It may beparticularly important that proceedingsbetween the owner and architect, and theowner and contractor be conducted sepa-rately because the architect and contractoreach have different responsibilities. Thecontractor warrants that the work will strictlyconform to specified requirements, whereasthe architect’s duty is to provide servicesthat will meet the professional standard ofcare. Normally, when there are multiple dis-putes, several individual arbitration pro-ceedings are held. This eliminates the con-fusion, complexity and delay experienced inmultiparty litigation.

The law in several states allows a court toorder consolidation or joinder despite thelanguage included here. Advice of an attor-ney familiar with the construction industry

4.6.4 Limitation on Consolidation orJoinder. No arbitration arising out of orrelating to the Contract shall include, byconsolidation or joinder or in any othermanner, the Architect, the Architect'semployees or consultants, except bywritten consent containing specific refer-ence to the Agreement and signed by theArchitect, Owner, Contractor and anyother person or entity sought to bejoined. No arbitration shall include, byconsolidation or joinder or in any othermanner, parties other than the Owner,Contractor, a separate contractor asdescribed in Article 6 and other personssubstantially involved in a commonquestion of fact or law whose presence isrequired if complete relief is to beaccorded in arbitration. No person orentity other than the Owner, Contractoror a separate contractor as described inArticle 6 shall be included as an originalthird party or additional third party to anarbitration whose interest or responsibil-ity is insubstantial. Consent to arbitrationinvolving an additional person or entityshall not constitute consent to arbitrationof a Claim not described therein or witha person or entity not named or describedtherein. The foregoing agreement to arbi-trate and other agreements to arbitratewith an additional person or entity dulyconsented to by parties to the Agreementshall be specifically enforceable underapplicable law in any court having juris-diction thereof.

4.6.5 Claims and Timely Assertion ofClaims. The party filing a notice ofdemand for arbitration must assert in thedemand all Claims then known to thatparty on which arbitration is permitted tobe demanded.

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may be valuable in this regard.After arbitration, one cannot typically go tocourt to try the same dispute again. If eitherparty fails to comply with an arbitrationaward, the other party can go to court tohave it enforced.

The term subcontractor does not includesuppliers who do not perform work at thesite but provide materials and equipment tothe contractor and subcontractors.

The term indirect contract refers to lowertiers of contractors such as sub-subcontrac-tors.

If the owner and architect require a specifictime limit for submitting proposed names,this limit should be stated in the supplemen-tary conditions.

4.6.6 Judgment on Final Award. Theaward rendered by the arbitrator or arbi-trators shall be final, and judgment maybe entered upon it in accordance withapplicable law in any court having juris-diction thereof.

ARTICLE 5 SUBCONTRACTORS

5.1 DEFINITIONS5.1.1 A Subcontractor is a person orentity who has a direct contract with theContractor to perform a portion of theWork at the site. The term"Subcontractor" is referred to throughoutthe Contract Documents as if singular innumber and means a Subcontractor or anauthorized representative of theSubcontractor. The term "Subcontractor"does not include a separate contractor orsubcontractors of a separate contractor.

5.1.2 A Sub-subcontractor is a personor entity who has a direct or indirectcontract with a Subcontractor to per-form a portion of the Work at the site.The term "Sub-subcontractor" is referredto throughout the Contract Documents asif singular in number and means a Sub-subcontractor or an authorized represen-tative of the Sub-subcontractor.

5.2 AWARD OF SUBCONTRACTS AND OTHER CONTRACTS FOR PORTIONS OFTHE WORK5.2.1 Unless otherwise stated in theContract Documents or the biddingrequirements, the Contractor, as soon aspracticable after award of theContract, shall furnish in writing to theOwner through the Architect the namesof persons or entities (including thosewho are to furnish materials or equip-

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The owner is permitted to reject proposedsubcontractors who are not reasonablycapable of performing the work withoutincurring additional cost or time.

If the parties disagree as to whether a par-ticular proposed subcontractor is reason-ably capable, the contractor may submit thedisagreement as a claim pursuant to Article4.

Any adjustment in the contract sum or con-tract time is a one-time change and thechange order is issued before the substitutesubcontractor begins performing work. If thesubstituted subcontractor later fails to per-form in a proper or timely manner, the con-tractor bears the same responsibility as if nosubstitution had occurred.

ment fabricated to a special design) pro-posed for each principal portion of theWork. The Architect will promptly replyto the Contractor in writing statingwhether or not the Owner or theArchitect, after due investigation, hasreasonable objection to any such pro-posed person or entity. Failure of theOwner or Architect to reply promptlyshall constitute notice of no reasonableobjection.

5.2.2 The Contractor shall not contractwith a proposed person or entity towhom the Owner or Architect has madereasonable and timely objection. TheContractor shall not be required to con-tract with anyone to whom theContractor has made reasonable objec-tion.

5.2.3 If the Owner or Architect hasreasonable objection to a person orentity proposed by the Contractor, theContractor shall propose another towhom the Owner or Architect has noreasonable objection. If the proposedbut rejected Subcontractor was reason-ably capable of performing the Work,the Contract Sum and Contract Timeshall be increased or decreased by thedifference, if any, occasioned by suchchange, and an appropriate ChangeOrder shall be issued before commence-ment of the substitute Subcontractor'sWork. However, no increase in theContract Sum or Contract Time shall beallowed for such change unless theContractor has acted promptly andresponsively in submitting names asrequired.

5.2.4 The Contractor shall not changea Subcontractor, person or entity previ-ously selected if the Owner or Architect

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A basic requirement of the contract is thatsubcontractors be bound by the terms of thecontract documents. AIA Document A401,Standard Form of Agreement BetweenContractor and Subcontractor, so provides.If other subcontract forms are utilized, caremust be taken to coordinate them withSubparagraph 5.3.1.

The contractor may include terms and con-ditions in subcontracts that vary from thosein the contract as long as such terms andconditions do not prejudice the rights of theowner and architect.

The pass-through of terms and conditionsof the contract documents serves to coordi-nate all parties performing work on the site.AIA Document A401 contains language per-mitting the contractor to make this require-ment of subcontractors.

makes reasonable objection to such sub-stitute.

5.3 SUBCONTRACTUAL RELATIONS5.3.1 By appropriate agreement, writ-ten where legally required for validity,the Contractor shall require eachSubcontractor, to the extent of the Workto be performed by the Subcontractor, tobe bound to the Contractor by termsof the Contract Documents, and toassume toward the Contractor all theobligations and responsibilities,including the responsibility for safetyof the Subcontractor's Work, whichthe Contractor, by these Documents,assumes toward the Owner andArchitect. Each subcontract agreementshall preserve and protect the rights ofthe Owner and Architect under theContract Documents with respect to theWork to be performed by theSubcontractor so that subcontractingthereof will not prejudice such rights,and shall allow to the Subcontractor,unless specifically provided otherwise inthe subcontract agreement, the benefit ofall rights, remedies and redress againstthe Contractor that the Contractor, by theContract Documents, has against theOwner. Where appropriate, theContractor shall require eachSubcontractor to enter into similaragreements with Sub-subcontractors.The Contractor shall make available toeach proposed Subcontractor, prior to theexecution of the subcontract agreement,copies of the Contract Documents towhich the Subcontractor will be bound,and, upon written request of theSubcontractor, identify to the

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In the event of contractor default, the ownerneeds to be able to continue the work with aminimum of disruption and expense. Theowner receives the benefit of the originalsubcontract price, which is subject to adjust-ment only pursuant to Subparagraph 5.4.2.Where a performance bond or paymentbond is involved, consultation with the con-tractor’s surety is essential before exercisingthese rights. Assignment of subcontractscan involve a number of complicated legalissues.

On some projects, the owner may retainmultiple contractors, each of whom will per-form a separate scope of work. The owner isthen responsible for coordinating the workof the separate contractors in much thesame way as the contractor is responsiblefor coordinating the work of the separatesubcontractors. The owner may perform thisresponsibility by use of its own employeesor consultants or by including this coordina-tion responsibility within the scope of one ofthe separate contractor’s agreement.

Separate contracts may require additionalresponsibility and services by the architect.These should be addressed in the owner-architect agreement.

The provisions of this subparagraph areconsistent with the concept that the projectmay be more comprehensive than the workof the contractor under the contract docu-ments. There may also be other construc-tion or operations on the site that are notpart of the project.

Subcontractor terms and conditions ofthe proposed subcontract agreementwhich may be at variance with theContract Documents. Subcontractorswill similarly make copies of applicableportions of such documents available totheir respective proposed Sub-subcon-tractors.

5.4 CONTINGENT ASSIGMENT OF SUBCONTRACTS5.4.1 Each subcontract agreement for aportion of the Work is assigned by theContractor to the Owner provided that: .1 assignment is effective only aftertermination of the Contract by the Ownerfor cause pursuant to Paragraph 14.2 andonly for those subcontract agreementswhich the Owner accepts by notifyingthe Subcontractor and Contractor inwriting; and.2 assignment is subject to the priorrights of the surety, if any, obligatedunder bond relating to the Contract.

5.4.2 Upon such assignment, if theWork has been suspended for more than30 days, the Subcontractor's compensa-tion shall be equitably adjusted forincreases in cost resulting from the sus-pension.

ARTICLE 6 CONSTRUCTION BYOWNER OR BY SEPARATE CONTRACTORS

6.1 OWNER'S RIGHT TO PERFORM CONSTRUCTION ANDTO AWARD SEPARATE CONTRACTS 6.1.1 The Owner reserves the right toperform construction or operations relat-ed to the Project with the Owner's ownforces, and to award separate contracts in

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The owner is responsible for coordinatingthe activities of the owner’s forces and of allseparate contractors with those of the con-tractor. This coordination may be achievedeither directly by the owner’s staff or througha separate contractual agreement, withcoordination undertaken by the architect,the contractor, one of the separate contrac-tors, a construction manager or anotherdesignated person or entity.

The contractor is required to cooperate withthe owner and separate contractors in coor-dinating construction schedules, makingsuch revisions as are necessary and follow-ing the revised schedules.

connection with other portions of theProject or other construction or opera-tions on the site under Conditions of theContract identical or substantially simi-lar to these including those portionsrelated to insurance and waiver of subro-gation. If the Contractor claims thatdelay or additional cost is involvedbecause of such action by the Owner, theContractor shall make such Claim asprovided in Paragraph 4.3.

6.1.2 When separate contracts areawarded for different portions of theProject or other construction or opera-tions on the site, the term "Contractor" inthe Contract Documents in each caseshall mean the Contractor who executeseach separate Owner-ContractorAgreement.

6.1.3 The Owner shall provide forcoordination of the activities of theOwner's own forces and of each sepa-rate contractor with the Work of theContractor, who shall cooperate withthem. The Contractor shall participatewith other separate contractors andthe Owner in reviewing their con-struction schedules when directed todo so. The Contractor shall make anyrevisions to the construction scheduledeemed necessary after a joint reviewand mutual agreement. The constructionschedules shall then constitute the sched-ules to be used by the Contractor, sepa-rate contractors and the Owner until sub-sequently revised.

6.1.4 Unless otherwise provided in theContract Documents, when the Ownerperforms construction or operationsrelated to the Project with the Owner'sown forces, the Owner shall be deemedto be subject to the same obligations and

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When the contractor’s work depends uponconstruction performed by the owner or byother separate contractors, the contractormust promptly notify the architect of appar-ent discrepancies or defects in the work thatwould prevent the contractor from properlyperforming its work. Otherwise, the assump-tion is that such partial or completed con-struction is (except for defects not then rea-sonably discoverable) in accordance withthe contract documents.

If the owner’s separate contractor is dam-aged by the contractor, the owner’s sepa-rate contractor must look to the owner forredress, since there is no direct contractualrelationship between the various contrac-tors. The owner in turn may seek reimburse-ment from the contractor who is at fault.

to have the same rights which apply tothe Contractor under the Conditions ofthe Contract, including, without exclud-ing others, those stated in Article 3, thisArticle 6 and Articles 10, 11 and 12.

6.2 MUTUAL RESPONSIBILITY6.2.1 The Contractor shall afford theOwner and separate contractors reason-able opportunity for introduction andstorage of their materials and equipmentand performance of their activities, andshall connect and coordinate theContractor's construction and operationswith theirs as required by the ContractDocuments.

6.2.2 If part of the Contractor's Workdepends for proper execution or resultsupon construction or operations by theOwner or a separate contractor, theContractor shall, prior to proceedingwith that portion of the Work, promptlyreport to the Architect apparent dis-crepancies or defects in such other con-struction that would render it unsuitablefor such proper execution and results.Failure of the Contractor so to reportshall constitute an acknowledgment thatthe Owner's or separate contractors'completed or partially completed con-struction is fit and proper to receive theContractor's Work, except as to defectsnot then reasonably discoverable.

6.2.3 The Owner shall be reim-bursed by the Contractor for costsincurred by the Owner which arepayable to a separate contractorbecause of delays, improperly timedactivities or defective construction of

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the Contractor. The Owner shall beresponsible to the Contractor for costsincurred by the Contractor because ofdelays, improperly timed activities, dam-age to the Work or defective constructionof a separate contractor.

6.2.4 The Contractor shall promptlyremedy damage wrongfully caused bythe Contractor to completed or partiallycompleted construction or to property ofthe Owner or separate contractors as pro-vided in Subparagraph 10.2.5.

6.2.5 The Owner and each separatecontractor shall have the same responsi-bilities for cutting and patching as aredescribed for the Contractor inSubparagraph 3.14.

6.3 OWNER'S RIGHT TOCLEAN UP6.3.1 If a dispute arises among theContractor, separate contractors and theOwner as to the responsibility undertheir respective contracts for maintainingthe premises and surrounding area freefrom waste materials and rubbish, theOwner may clean up and the Architectwill allocate the cost among thoseresponsible.

ARTICLE 7 CHANGES IN THEWORK

7.1 GENERAL7.1.1 Changes in the Work may beaccomplished after execution of theContract, and without invalidating theContract, by Change Order, ConstructionChange Directive or order for a minorchange in the Work, subject to the limi-tations stated in this Article 7 and else-where in the Contract Documents.

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If the owner and contractor can agree onboth the change in contract sum and con-tract time, a change order is issued. If noagreement can be reached, the owner canstill require the work to be performed byissuance of a construction change directive.In either event, and also in the case of anorder for a minor change in the work issuedby the architect, the contractor must performchanges that are within the general scope ofthe work.

Change orders are prepared in writing bythe architect, and all of the listed items mustbe stated and agreed upon. If those itemsare not agreed upon, the owner may issueeither a construction change directive orabandon the proposed change.

Even if the contract sum or contract time areto remain unchanged, that fact should berecorded by marking “no net change” on thechange order. This helps to avoid disputesas to whether an increase in the contractsum or extension of the contract time wasintended, particularly if such changes weresuggested in the contractor’s proposal.

The list of methods set out in Subparagraph7.3.3 is mandatory with respect to construc-tion change directives. Those methods areoptional with respect to change orders.

7.1.2 A Change Order shall be basedupon agreement among the Owner,Contractor and Architect; a ConstructionChange Directive requires agreement bythe Owner and Architect and may or maynot be agreed to by the Contractor; anorder for a minor change in the Workmay be issued by the Architect alone.

7.1.3 Changes in the Work shall be per-formed under applicable provisions ofthe Contract Documents, and theContractor shall proceed promptly,unless otherwise provided in the ChangeOrder, Construction Change Directive ororder for a minor change in the Work.

7.2 CHANGE ORDERS 7.2.1 A Change Order is a writteninstrument prepared by the Architect andsigned by the Owner, Contractor andArchitect, stating their agreement uponall of the following:.1 change in the Work;.2 the amount of the adjustment,if any, in the Contract Sum; and.3 the extent of the adjustment, ifany, in the Contract Time.

7.2.2 Methods used in determiningadjustments to the Contract Sum mayinclude those listed in Subparagraph7.3.3.

7.3 CONSTRUCTION CHANGEDIRECTIVES7.3.1 A Construction Change Directiveis a written order prepared by theArchitect and signed by the Owner andArchitect, directing a change in the Workprior to agreement on adjustment, if any,

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Absent a separate modification signed bythe owner and contractor, changes in thework that are beyond the general scope ofthe contract need not be performed by thecontractor. Modifications that materially alterthe scope of the contract should be submit-ted for approval of the surety to ensure thatthe surety will not be released from its oblig-ations by such changes.

The construction change directive is themechanism by which the owner exercises aunilateral right to order changes in the workwithout invalidating the contract. It is usedwhen a change order cannot be obtaineddue to limited time or disagreementbetween the parties with regard to associat-ed changes in the contract sum or contracttime.

AIA Document G714, Construction ChangeDirective, can be used to document thechange.

in the Contract Sum or Contract Time, orboth. The Owner may by ConstructionChange Directive, without invalidatingthe Contract, order changes in the Workwithin the general scope of theContract consisting of additions, dele-tions or other revisions, the ContractSum and Contract Time being adjustedaccordingly.

7.3.2 A Construction Change Directiveshall be used in the absence of totalagreement on the terms of a ChangeOrder.

7.3.3 If the Construction ChangeDirective provides for an adjustment tothe Contract Sum, the adjustment shallbe based on one of the following meth-ods:.1 mutual acceptance of a lump sumproperly itemized andsupported by sufficient substantiatingdata to permit evaluation;.2 unit prices stated in the ContractDocuments or subsequentlyagreed upon;.3 cost to be determined in a manneragreed upon by the parties anda mutually acceptable fixed or percent-age fee; or.4 as provided in Subparagraph7.3.6.

7.3.4 Upon receipt of a ConstructionChange Directive, the Contractor shallpromptly proceed with the change in theWork involved and advise the Architectof the Contractor's agreement or dis-agreement with the method, if any, pro-vided in the Construction ChangeDirective for determining the proposedadjustment in the Contract Sum or

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This might include invoices with similarbreakdowns from subcontractors, slips frommaterial suppliers and similar data. Thearchitect may request the assistance of theowner’s accountant in reviewing the ade-quacy of such financial data.

It is appropriate to identify in the supple-mentary conditions the basis for determin-ing the rental values (e.g., the contractor’snormal rates, the Associated GeneralContractors’ published rates or others)applicable to contractor-owned equipment.Retail rental rates may include elements ofoverhead and profit. Duplication of thesecost items should be avoided.

Where the change results in a credit, theamount of the credit is determined by thecost that would have been incurred in exe-cuting the change by the contractor withoutdecreasing the contractor’s overhead andprofit.

7.3.6 If the Contractor does not respondpromptly or disagrees with the methodfor adjustment in the Contract Sum, themethod and the adjustment shall bedetermined by the Architect on the basisof reasonable expenditures and savingsof those performing the Work attribut-able to the change, including, in case ofan increase in the Contract Sum, a rea-sonable allowance for overhead andprofit. In such case, and also underClause 7.3.3.3, the Contractor shall keepand present, in such form as theArchitect may prescribe, an itemizedaccounting together with appropriatesupporting data. Unless otherwise pro-vided in the Contract Documents, costsfor the purposes of this Subparagraph7.3.6 shall be limited to the following: .1 costs of labor, including socialsecurity, old age and unemploymentinsurance, fringe benefits required byagreement or custom, and workers' com-pensation insurance;.2 costs of materials, supplies andequipment, including cost of trans-portation, whether incorporated or con-sumed;.3 rental costs of machinery andequipment, exclusive of hand tools,whether rented from the Contractor orothers;.4 costs of premiums for all bondsand insurance, permit fees, and sales, useor similar taxes related to the Work; and.5 additional costs of supervisionand field office personnel directly attrib-utable to the change.

7.3.7 The amount of credit to be allowedby the Contractor to the Owner for adeletion or change which results in anet decrease in the Contract Sum shallbe actual net cost as confirmed by theArchitect. When both additions and cred-

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When work required by a constructionchange directive spans several paymentperiods, the contractor is paid on the basisof work performed during each such period.If the parties disagree about the amountdue the contractor for any payment period,the matter is referred to the architect, whomakes an interim determination. The ownerthen compensates the contractor on thebasis of the architect’s interim determina-tion. If either party disagrees with that deter-mination, that party may assert a claim.

Evidence of the costs must be assembledby the contractor and submitted to the archi-tect as part of the contractor’s application forpayment. The architect is under no obliga-tion to audit these costs, but is only requiredto exercise reasonable professional judg-ment in reviewing the submitted information.

AIA Document G710, Architect’sSupplemental Instructions, may be used todocument minor changes. A change that isinconsistent with the intent of the contractdocuments must be documented as achange order or construction change direc-tive rather than as a minor change in thework, even if the contract sum and contracttime are unaffected.

Problems often arise when the parties dis-agree as to what constitutes a minorchange. Therefore, before a minor changeorder is issued, the contractor’s agreementthat the proposed minor change will notaffect the contract sum or contract timeshould be documented.

its covering related Work or substitutionsare involved in a change, the allowancefor overhead and profit shall be figuredon the basis of net increase, if any, withrespect to that change.

7.3.8 Pending final determination of thetotal cost of a Construction ChangeDirective to the Owner, amounts not indispute for such changes in the Workshall be included in Applications forPayment accompanied by a ChangeOrder indicating the parties' agreementwith part or all of such costs. For anyportion of such cost that remains in dis-pute, the Architect will make an inter-im determination for purposes ofmonthly certification for payment forthose costs. That determination of costshall adjust the Contract Sum on thesame basis as a Change Order, subject tothe right of either party to disagree andassert a claim in accordance with Article4.

7.3.9 When the Owner and Contractoragree with the determination made bythe Architect concerning the adjustmentsin the Contract Sum and Contract Time,or otherwise reach agreement upon theadjustments, such agreement shall beeffective immediately and shall berecorded by preparation and execution ofan appropriate Change Order.

7.4 MINOR CHANGES IN THEWORK7.4.1 The Architect will have authorityto order minor changes in the Work notinvolving adjustment in the ContractSum or extension of the Contract Timeand not inconsistent with the intent of theContract Documents. Such changes shallbe effected by written order and shall bebinding on the Owner and Contractor.

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The work must be substantially completewithin the contract time (as adjusted). Finalcompletion will occur after this period. Thisdistinction may be important if there are pro-visions for liquidated damages in the eventthe date for substantial completion is notmet. Liquidated damages are only assesseduntil date of actual substantial completion.

The contract time starts to run as of the datespecified in the owner-contractor agree-ment, whether or not the contractor beginswork on that date.

“Time is of the essence” means that timelyperformance is an express condition of thecontract, and any delay in the owner’s orcontractor’s performance will constitute abreach of contract.

The contractor is precluded from contendingthat the contract documents were defectivebecause the time allowed for constructionwas not sufficient to perform the work.

The Contractor shall carry out such writ-ten orders promptly.ARTICLE 8 TIME

8.1 DEFINITIONS 8.1.1 Unless otherwise provided,Contract Time is the period of time,including authorized adjustments, allot-ted in the Contract Documents forSubstantial Completion of the Work.

8.1.2 The date of commencement of theWork is the date established in theAgreement.

8.1.3 The date of SubstantialCompletion is the date certified by theArchitect in accordance with Paragraph9.8.

8.1.4 The term "day" as used in theContract Documents shall mean calendarday unless otherwise specificallydefined.

8.2 PROGRESS AND COMPLETION8.2.1 Time limits stated in the ContractDocuments are of the essence of theContract. By executing the Agreementthe Contractor confirms that theContract Time is a reasonable periodfor performing the Work.

8.2.2 The Contractor shall not knowing-ly, except by agreement or instruction ofthe Owner in writing, prematurely com-mence operations on the site or else-where prior to the effective date of insur-ance required by Article 11 to be fur-nished by the Contractor and Owner. Thedate of commencement of the Work shallnot be changed by the effective date ofsuch insurance. Unless the date of com-

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Circumstances beyond the contractor’s con-trol can result in an excusable delay, justify-ing an extension of the contract time. If anextension is justified, the architect deter-mines its extent and prepares a changeorder to reflect the extension.

So-called “no damages for delay” clausesare sometimes suggested or required by theowner. The advice of the owner’s attorneyshould be sought by the owner before sucha clause is included in the supplementaryconditions. Such a clause may now be lessdesirable or needed in view of the contrac-tor’s waiver of consequential damages inSubparagraph 4.3.10.

mencement is established by theContract Documents or a notice to pro-ceed given by the Owner, the Contractorshall notify the Owner in writing not lessthan five days or other agreed periodbefore commencing the Work to permitthe timely filing of mortgages, mechan-ic’s liens and other security interests.

8.2.3 The Contractor shall proceedexpeditiously with adequate forces andshall achieve Substantial Completionwithin the Contract Time.

8.3 DELAYS AND EXTENSIONS OF TIME8.3.1 If the Contractor is delayed at anytime in the commencement or progressof the Work by an act or neglect of theOwner or Architect, or of an employeeof either, or of a separate contractoremployed by the Owner, or by changesordered in the Work, or by labor dis-putes, fire, unusual delay in deliveries,unavoidable casualties or other causesbeyond the Contractor's control, or bydelay authorized by the Owner pend-ing mediation and arbitration, or byother causes which the Architectdetermines may justify delay, then theContract Time shall be extended byChange Order for such reasonable timeas the Architect may determine.

8.3.2 Claims relating to time shall bemade in accordance with applicable pro-visions of Paragraph 4.3.

8.3.3 This Paragraph 8.3 does not pre-clude recovery of damages for delay byeither party under other provisions of theContract Documents.

ARTICLE 9 PAYMENTS ANDCOMPLETION

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The schedule of values is the basis forreview of the contractor’s applications forpayment. The architect can requestchanges in the proposed schedule, but theaccounting accuracy of the schedule is thecontractor’s responsibility.

The form of the schedule and the type andlevel of detail of required supporting datamay be described in division 1 of the speci-fications. One reason that the architect maywant to see supporting data is to verify thatthe schedule is not being “front loaded.”Verification normally is required only whenthe contractor assigns obviously inflatedvalues to work that will be done early in theconstruction process. “Front loading” accel-erates cash flow to the contractor, resultingin overpayments that can be particularlytroublesome in the event of a contractordefault.

AIA Document G703, Continuation Sheet(for AIA Document G702, Application andCertificate for Payment), is often used torecord the submitted schedule of values.

Procedures for applications, including for-mat, data required to support accuracy andcompleteness, and specific voucher or lienrequirements may be described in detail indivision 1 of the specifications. If applicable,provisions for retainage may be specified inthe owner-contractor agreement and in thesupplementary conditions. The date onwhich payment is due is specified in theowner-contractor agreement.

9.1 CONTRACT SUM9.1.1 The Contract Sum is stated in theAgreement and, including authorizedadjustments, is the total amount payableby the Owner to the Contractor for per-formance of the Work under the ContractDocuments.

9.2 SCHEDULE OF VALUES9.2.1 Before the first Application forPayment, the Contractor shall submit tothe Architect a schedule of values allo-cated to various portions of the Work,prepared in such form and supportedby such data to substantiate its accu-racy as the Architect may require. Thisschedule, unless objected to by theArchitect, shall be used as a basis forreviewing the Contractor's Applicationsfor Payment.

9.3 APPLICATIONS FOR PAYMENT9.3.1 At least ten days before the dateestablished for each progress payment,the Contractor shall submit to theArchitect an itemized Application forPayment for operations completed inaccordance with the schedule of val-ues. Such application shall be notarized,if required, and supported by such datasubstantiating the Contractor's right topayment as the Owner or Architect mayrequire, such as copies of requisitionsfrom Subcontractors and material suppli-ers, and reflecting retainage if providedfor in the Contract Documents.

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Payment of such amounts, if applied forunder this clause, is mandatory underSubparagraph 7.3.8.

Applications for payment may only includeamounts for work that the contractor intendsto make payment. In the event of a disputewith a subcontractor or supplier, amountsfor work by a replacement subcontractor orsupplier or the contractor’s own forces maybe included.

Before payment is made for stored materi-als and equipment, the contractor must pro-vide evidence establishing the owner’s titleto stored materials and equipment or other-wise safeguarding the owner’s interest inthem. For example, bills of sale or other doc-umentation may establish that the ownerhas clear title to such materials and equip-ment. If other than the usual retainage isrequired, that should also be specified.

Subparagraph 11.4.1 has provisions cover-ing property insurance. Clause 11.4.1.4, inparticular, addresses materials and equip-ment stored off site.

Questions regarding clear title involve legalissues and should be referred to the owner’slegal counsel.

9.3.1.1 As provided in Subparagraph7.3.8, such applications may includerequests for payment on account ofchanges in the Work which have beenproperly authorized by ConstructionChange Directives, or by interim deter-minations of the Architect, but not yetincluded in Change Orders.

9.3.1.2 Such applications may notinclude requests for payment for por-tions of the Work for which theContractor does not intend to pay to aSubcontractor or material supplier,unless such Work has been performed byothers whom the Contractor intends topay.

9.3.2 Unless otherwise provided in theContract Documents, payments shall bemade on account of materials and equip-ment delivered and suitably stored at thesite for subsequent incorporation in theWork. If approved in advance by theOwner, payment may similarly be madefor materials and equipment suitablystored off the site at a location agreedupon in writing. Payment for materialsand equipment stored on or off the siteshall be conditioned upon compliance bythe Contractor with procedures satisfac-tory to the Owner to establish theOwner's title to such materials andequipment or otherwise protect theOwner's interest, and shall include thecosts of applicable insurance, storageand transportation to the site for suchmaterials and equipment stored off thesite.

9.3.3 The Contractor warrants that titleto all Work covered by an Applicationfor Payment will pass to the Owner nolater than the time of payment. TheContractor further warrants that upon

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Upon receipt of an application for payment,the architect has three options: (1) certifythe amount the contractor has applied forand forward the certificate to the owner, (2)certify a lesser amount and forward the cer-tificate to the owner, or (3) reject the con-tractor’s application. Actions described in (2)and (3) may be taken for any of the reasonsdescribed in Subparagraph 9.5.1.

Subparagraph 9.4.2 is extremely important.It spells out what the architect’s certificaterepresents, what it does not represent andthe basis of the architect’s actions.Certification for payment of amounts not yetdue can cost the owner unnecessary inter-est on construction funds, and can result infurther loss by the owner if the contractorlater defaults. Overpayment may also causeslow or misdirected payment to subcontrac-tors.

Certificates for payment do not constituteacceptance of work for which payment is tobe made.

submittal of an Application for Paymentall Work for which Certificates forPayment have been previously issuedand payments received from the Ownershall, to the best of the Contractor'sknowledge, information and belief, befree and clear of liens, claims, securityinterests or encumbrances in favor of theContractor, Subcontractors, materialsuppliers, or other persons or entitiesmaking a claim by reason of having pro-vided labor, materials and equipmentrelating to the Work.

9.4 CERTIFICATES FOR PAYMENT9.4.1 The Architect will, within sevendays after receipt of the Contractor'sApplication for Payment, either issue tothe Owner a Certificate for Payment,with a copy to the Contractor, for suchamount as the Architect determines isproperly due, or notify the Contractorand Owner in writing of theArchitect's reasons for withholdingcertification in whole or in part as pro-vided in Subparagraph 9.5.1.

9.4.2 The issuance of a Certificate forPayment will constitute a representationby the Architect to the Owner, based onthe Architect's evaluation of the Workand the data comprising the Applicationfor Payment, that the Work has pro-gressed to the point indicated and that, tothe best of the Architect's knowledge,information and belief, the quality of theWork is in accordance with the ContractDocuments. The foregoing representa-tions are subject to an evaluation ofthe Work for conformance with theContract Documents upon SubstantialCompletion, to results of subsequenttests and inspections, to correction ofminor deviations from the Contract

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Because many of the reasons for nullifyingor withholding a certificate for payment havesubstantial legal components, the architectmay obtain assistance from the owner’slegal counsel in order to decide legal ques-tions.

Decisions to certify applications for pay-ment, other than for final payment, may bereconsidered and reversed in the architect’ssubsequent evaluations of the work.

Documents prior to completion and tospecific qualifications expressed by theArchitect. The issuance of a Certificatefor Payment will further constitute a rep-resentation that the Contractor is entitledto payment in the amount certified.However, the issuance of a Certificatefor Payment will not be a representationthat the Architect has (1) made exhaus-tive or continuous on-site inspections tocheck the quality or quantity of theWork, (2) reviewed construction means,methods, techniques, sequences or pro-cedures, (3) reviewed copies of requisi-tions received from Subcontractors andmaterial suppliers and other data request-ed by the Owner to substantiate theContractor's right to payment, or (4)made examination to ascertain how orfor what purpose the Contractor has usedmoney previously paid on account of theContract Sum.

9.5 DECISIONS TO WITHHOLD CERTIFICATION9.5.1 The Architect may withhold aCertificate for Payment in whole or inpart, to the extent reasonably necessaryto protect the Owner, if in the Architect'sopinion the representations to the Ownerrequired by Subparagraph 9.4.2 cannotbe made. If the Architect is unable to cer-tify payment in the amount of theApplication, the Architect will notify theContractor and Owner as provided inSubparagraph 9.4.1. If the Contractorand Architect cannot agree on a revisedamount, the Architect will promptlyissue a Certificate for Payment for theamount for which the Architect is able tomake such representations to the Owner.The Architect may also withhold aCertificate for Payment or, because ofsubsequently discovered evidence, maynullify the whole or a part of a

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If a subcontractor or supplier notifies theowner of an intent to place a lien on the pro-ject, the contractor may choose to post abond or provide other security to protect theowner against loss, rather than have its pay-ments interrupted. When a payment bondhas already been provided, the owner mayrequest confirmation from the surety thatthe bond applies to the claim, or mayrequest some additional bond or securitycommitment.

The contractor can wait until ten days beforethe date when payment is due before sub-mitting the application for payment. Thearchitect then has up to seven days toreview the application and take action. Thus,the owner may have as little as three dayswithin which to make payment. If the ownerneeds more time to make payment, thisshould be covered in the supplementaryconditions and in the owner-contractoragreement.

Subparagraph 13.6.1 establishes therequirements for interest on late payments;interest begins to accrue on the date pay-ment is due.

Certificate for Payment previouslyissued, to such extent as may be neces-sary in the Architect's opinion to protectthe Owner from loss for which theContractor is responsible, including lossresulting from acts and omissionsdescribed in Subparagraph 3.3.2,because of:.1 defective Work not remedied;.2 third party claims filed or reason-able evidence indicating proba-ble filing of such claims unless securityacceptable to the Owner is provided bythe Contractor;.3 failure of the Contractor to makepayments properly toSubcontractors or for labor, materials orequipment;.4 reasonable evidence that theWork cannot be completed for theunpaid balance of the Contract Sum;.5 damage to the Owner or anothercontractor;.6 reasonable evidence that theWork will not be completed within theContract Time, and that the unpaid bal-ance would not be adequate to coveractual or liquidated damages for theanticipated delay; or.7 persistent failure to carry out theWork in accordance with the ContractDocuments.

9.5.2 When the above reasons for with-holding certification are removed, certi-fication will be made for amounts previ-ously withheld.

9.6 PROGRESS PAYMENTS9.6.1 After the Architect has issued aCertificate for Payment, the Owner shallmake payment in the manner and withinthe time provided in the ContractDocuments, and shall so notify theArchitect.

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This precludes the contractor from usingmoney received for subcontractors’ work forother purposes. It does not, however, implythat a subcontractor’s right to be paid forcompleted work is contingent upon the con-tractor’s receipt of payment from the owner.

If the contractor has a legitimate questionabout the quality of a subcontractor’s work,the proper action would be for the contrac-tor to adjust the application for paymentsubmitted to the owner with regard to thatsubcontractor for that period. Funds alreadypaid by the owner to the contractor for suchsubcontractors should either be paid to thesubcontractor or returned to the owner.

Unless otherwise provided in the subcon-tract agreement, the contractor may notretain from payments due to subcontractorsmore than the owner retains from paymentsdue to the contractor relative to that sub-contractor’s work.

This is one of very few direct contactsbetween the architect and subcontractorscontemplated by AIA Document A201-1997.

Lien laws and other state or local law out-side of the contract documents may apply.

9.6.2 The Contractor shall promptlypay each Subcontractor, upon receiptof payment from the Owner, out of theamount paid to the Contractor onaccount of such Subcontractor's por-tion of the Work, the amount to whichsaid Subcontractor is entitled, reflect-ing percentages actually retained frompayments to the Contractor onaccount of such Subcontractor's por-tion of the Work. The Contractor shall,by appropriate agreement with eachSubcontractor, require eachSubcontractor to make payments to Sub-subcontractors in a similar manner.

9.6.3 The Architect will, on request,furnish to a Subcontractor, if practica-ble, information regarding percentagesof completion or amounts applied for bythe Contractor and action taken thereonby the Architect and Owner on accountof portions of the Work done by suchSubcontractor.

9.6.4 Neither the Owner nor Architectshall have an obligation to pay or to seeto the payment of money to aSubcontractor except as may otherwisebe required by law.

9.6.5 Payment to material suppliersshall be treated in a manner similar tothat provided in Subparagraphs 9.6.2,9.6.3 and 9.6.4.

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The mistaken inclusion of, and payment for,an item of work on one certificate does notpreclude the architect from adjusting thatitem in a subsequent certificate.

This requirement establishes a trust in favorof subcontractors and suppliers of moniesreceived by the contractor by reason of workand materials of its subcontractors and sup-pliers. This subparagraph gives subcontrac-tors and suppliers a preference in the eventof the contractor’s bankruptcy and therebyprotects the owner from lien claims whichcould have been asserted by those entitieshad they not been furnished with this pref-erence. As the recipient of trust funds, thecontractor is under an obligation to properlyapply the funds for the account of the sub-contractors and suppliers.

Absent this provision, the contractor wouldnot be able to co-mingle monies received forthe benefit of subcontractors or supplierswith the contractor’s own funds. Such aresult would create accounting and book-keeping complexities unnecessary to theaccomplishment of the purpose of this pro-vision.

9.6.6 A Certificate for Payment, aprogress payment, or partial or entire useor occupancy of the Project by theOwner shall not constitute acceptanceof Work not in accordance with theContract Documents.

9.6.7 Unless the Contractor provides theOwner with a payment bond in the fullpenal sum of the Contract Sum, pay-ments received by the Contractor forWork properly performed bySubcontractors and suppliers shall beheld by the Contractor for thoseSubcontractors or suppliers who per-formed Work or furnished materials, orboth, under contract with the Contractorfor which payment was made by theOwner. Nothing contained herein shallrequire money to be placed in a sepa-rate account and not commingled withmoney of the Contractor, shall createany fiduciary liability or tort liability onthe part of the Contractor for breach oftrust or shall entitle any person or entityto an award of punitive damages againstthe Contractor for breach of the require-ments of this provision.

9.7 FAILURE OF PAYMENT9.7.1 If the Architect does not issue aCertificate for Payment, through no faultof the Contractor, within seven days afterreceipt of the Contractor's Applicationfor Payment, or if the Owner does notpay the Contractor within seven daysafter the date established in the ContractDocuments the amount certified by theArchitect or awarded by arbitration, thenthe Contractor may, upon seven addition-al days' written notice to the Owner andArchitect, stop the Work until paymentof the amount owing has been received.The Contract Time shall be extendedappropriately and the Contract Sum shall

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The architect determines the date of sub-stantial completion by establishing the pointat which the work or a designated portionthereof can be occupied or used as intend-ed. This issue is not affected by the dollarvalue of the uncompleted work; the absenceof a one-dollar part in the only elevator serv-ing a hospital operating room could delaysubstantial completion.

It often happens that an occupancy permitis issued by the appropriate authority atapproximately the same time as the date ofsubstantial completion. These times are notinterchangeable. The criteria upon which anoccupancy permit is issued may vary fromjurisdiction to jurisdiction, while the criteriafor establishing the date of substantial com-pletion is fixed by contract.

Because the contract time is tolled at sub-stantial completion, contractors sometimestend to see the work as substantially com-plete sooner than would more objectiveobservers. As an independent adviser, thearchitect makes the final decision on thismatter.

be increased by the amount of theContractor's reasonable costs of shut-down, delay and start-up, plus interest asprovided for in the Contract Documents.

9.8 SUBSTANTIAL COMPLETION9.8.1 Substantial Completion is thestage in the progress of the Work whenthe Work or designated portion thereof issufficiently complete in accordance withthe Contract Documents so that theOwner can occupy or utilize the Workfor its intended use.

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Paragraph 9.8 contemplates substantialcompletion of the entire work. Earlier sub-stantial completion of a portion of the workrequires the owner’s agreement to desig-nate such portion separately from the rest ofthe work.

Typically, it is the contractor who initially pro-poses that the work is substantially com-plete. The contractor does this by submittingto the architect a list of items that must becompleted before the work is finally com-plete. This list is commonly referred to asthe punch list. It constitutes an acknowledg-ment by the contractor that work remains tobe done after substantial completion, and isoften supplemented by the architect as aresult of the architect’s inspection. Some ofthe items may affect substantial completion;others may not.

This is one of only two inspections by thearchitect contemplated under AIADocument A201-1997. The other inspectiontakes place prior to final payment.

If the architect does not agree with the con-tractor that the work is substantially com-plete, the contractor must complete or cor-rect the items noted by the architect andrequest another inspection.

This process, if repeated over and over, mayentitle the architect to additional compensa-tion. In that case, the owner may be justifiedin filing a claim against the contractor forthis additional expense.

9.8.2 When the Contractor considersthat the Work, or a portion thereofwhich the Owner agrees to accept sep-arately, is substantially complete, theContractor shall prepare and submitto the Architect a comprehensive list ofitems to be completed or correctedprior to final payment. Failure toinclude an item on such list does not alterthe responsibility of the Contractor tocomplete all Work in accordance withthe Contract Documents.

9.8.3 Upon receipt of the Contractor'slist, the Architect will make an inspec-tion to determine whether the Work ordesignated portion thereof is substantial-ly complete. If the Architect's inspectiondiscloses any item, whether or notincluded on the Contractor's list, whichis not sufficiently complete in accor-dance with the Contract Documents sothat the Owner can occupy or utilize theWork or designated portion thereof forits intended use, the Contractor shall,before issuance of the Certificate ofSubstantial Completion, complete orcorrect such item upon notification bythe Architect. In such case, theContractor shall then submit a requestfor another inspection by the Architectto determine Substantial Completion.

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When the architect determines that thework is substantially complete, the architectprepares a certificate of substantial comple-tion, with the final punch list attached,establishing the date of substantial comple-tion and the other matters described here.

Construction workers may still need to workin occupied spaces following substantialcompletion. It is important that the certificatebe clear about the responsibilities of theowner and contractor for the items men-tioned. Both the owner and contractorshould sign the certificate to indicate theirunderstanding of and agreement with theirassigned responsibilities.

This provision contemplates full release ofretainage at substantial completion, except-ing only retainage for work that is incom-plete or not in accordance with the contractdocuments.

The owner may wish to occupy or use partof the work before it is substantially com-plete. Paragraph 9.9 establishes the groundrules under which this can occur. A separateagreement between the owner and contrac-tor is required, and the property insurermust consent.

Moving into a building frequently causesdamage to finished and unfinished work.The parties should document the status ofthe work before and after the moving byinspection reports, photographs, videotapeor other means.

9.8.4 When the Work or designated por-tion thereof is substantially complete,the Architect will prepare a Certificateof Substantial Completion which shallestablish the date of SubstantialCompletion, shall establish responsibil-ities of the Owner and Contractor forsecurity, maintenance, heat, utilities,damage to the Work and insurance,and shall fix the time within which theContractor shall finish all items on thelist accompanying the Certificate.Warranties required by the ContractDocuments shall commence on the dateof Substantial Completion of the Work ordesignated portion thereof unless other-wise provided in the Certificate ofSubstantial Completion.

9.8.5 The Certificate of SubstantialCompletion shall be submitted to theOwner and Contractor for their writtenacceptance of responsibilities assignedto them in such Certificate. Upon suchacceptance and consent of surety, if any,the Owner shall make payment ofretainage applying to such Work ordesignated portion thereof. Such pay-ment shall be adjusted for Work that isincomplete or not in accordance with therequirements of the ContractDocuments.

9.9 PARTIAL OCCUPANCY ORUSE9.9.1 The Owner may occupy or useany completed or partially completedportion of the Work at any stage whensuch portion is designated by separateagreement with the Contractor, pro-vided such occupancy or use is consent-ed to by the insurer as required underClause 11.4.1.5 and authorized by publicauthorities having jurisdiction over the

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The list prepared by the contractor and sup-plemented by the architect makes referenceto all items which are not in accordance withthe contract documents. Those which doaffect substantial completion must be reme-died before the architect can issue the cer-tificate of substantial completion; the othersare to be corrected or completed beforefinal payment.

This provision is aimed at reducing futuredisputes by establishing a baseline againstwhich to measure damage to the work thatmay occur after the owner begins to occupyor use part of the work but prior to final pay-ment.

The contractor initially decides that the workis complete and is ready for final inspectionby the architect and owner. The final appli-cation for payment, along with the appropri-ate supporting data, must accompany thecontractor’s request for final inspection. Ifthe stated conditions are met, the architectissues a final application for payment. Bysigning the certificate, the architect alsorepresents that the conditions listed inSubparagraph 9.10.2 have been fulfilled,making it unnecessary to issue a separatecertificate for final completion. Because thecontractor continues to be obligated to cor-rect work and to perform under warrantyobligations, no specific certificate of finalcompletion is issued by the architect.

Work. Such partial occupancy or usemay commence whether or not the por-tion is substantially complete, providedthe Owner and Contractor have acceptedin writing the responsibilities assigned toeach of them for payments, retainage, ifany, security, maintenance, heat, utilities,damage to the Work and insurance, andhave agreed in writing concerning theperiod for correction of the Work andcommencement of warranties requiredby the Contract Documents. When theContractor considers a portion sub-stantially complete, the Contractorshall prepare and submit a list to theArchitect as provided underSubparagraph 9.8.2. Consent of theContractor to partial occupancy or useshall not be unreasonably withheld. Thestage of the progress of the Work shall bedetermined by written agreementbetween the Owner and Contractor or, ifno agreement is reached, by decision ofthe Architect.

9.9.2 Immediately prior to such partialoccupancy or use, the Owner,Contractor and Architect shall jointlyinspect the area to be occupied or por-tion of the Work to be used in order todetermine and record the condition ofthe Work.

9.9.3 Unless otherwise agreed upon,partial occupancy or use of a portion orportions of the Work shall not constituteacceptance of Work not complying withthe requirements of the ContractDocuments.

9.10 FINAL COMPLETION ANDFINAL PAYMENT 9.10.1 Upon receipt of written noticethat the Work is ready for final inspec-tion and acceptance and upon receipt

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AIA Documents G706, Contractor’s Affidavitof Payment of Debts and Claims, andG706A, Contractor’s Affidavit of Release ofLiens, may be used for this purpose.

Because the surety is entitled to use theretainage to complete the work in the eventof a contractor’s default, the surety’s con-sent is required so that the surety does nothave grounds to avoid obligations it wouldotherwise have under applicable bonds. AIADocument G707, Consent of SuretyCompany to Final Payment, is available forthis purpose.

All of these items may be requested at theowner’s discretion. While the architect mayoffer comments based on past experiencein such matters, the owner and owner’slegal counsel should determine what isdesired or necessary.

of a final Application for Payment, theArchitect will promptly make suchinspection and, when the Architect findsthe Work acceptable under the ContractDocuments and the Contract fully per-formed, the Architect will promptly issuea final Certificate for Payment statingthat to the best of the Architect's knowl-edge, information and belief, and on thebasis of the Architect's on-site visits andinspections, the Work has been complet-ed in accordance with terms and condi-tions of the Contract Documents and thatthe entire balance found to be due theContractor and noted in the finalCertificate is due and payable. TheArchitect's final Certificate for Paymentwill constitute a further representationthat conditions listed in Subparagraph9.10.2 as precedent to the Contractor'sbeing entitled to final payment have beenfulfilled.

9.10.2 Neither final payment nor anyremaining retained percentage shallbecome due until the Contractor submitsto the Architect (1) an affidavit that pay-rolls, bills for materials and equipment,and other indebtedness connected withthe Work for which the Owner or theOwner's property might be responsibleor encumbered (less amounts withheldby Owner) have been paid or otherwisesatisfied, (2) a certificate evidencing thatinsurance required by the ContractDocuments to remain in force after finalpayment is currently in effect and willnot be canceled or allowed to expire untilat least 30 days' prior written notice hasbeen given to the Owner, (3) a writtenstatement that the Contractor knows ofno substantial reason that the insurancewill not be renewable to cover the periodrequired by the Contract Documents, (4)consent of surety, if any, to final pay-

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Because it may be impossible to obtain lienreleases or waivers for reasons other thannonpayment, this provision allows the con-tractor to post a bond against unfulfilledrequirements such as unreleased liens,manufacturers’ warranties not yet obtained,etc. Thus, the project can be closed outwithout releasing the contractor from theseobligations to the owner.

In the event final completion is delayed bycauses beyond the contractor’s control,Subparagraph 9.10.3 allows for paymentand release of retainage on work completedand accepted.

Consent of surety is required in situationswhere the surety’s interest is affected.

ment and (5), if required by the Owner,other data establishing payment or satis-faction of obligations, such as receipts,releases and waivers of liens, claims,security interests or encumbrances aris-ing out of the Contract, to the extent andin such form as may be designated by theOwner. If a Subcontractor refuses to fur-nish a release or waiver required by theOwner, the Contractor may furnish abond satisfactory to the Owner toindemnify the Owner against such lien.If such lien remains unsatisfied afterpayments are made, the Contractor shallrefund to the Owner all money that theOwner may be compelled to pay in dis-charging such lien, including all costsand reasonable attorneys' fees.

9.10.3 If, after Substantial Completion ofthe Work, final completion thereof ismaterially delayed through no fault ofthe Contractor or by issuance of ChangeOrders affecting final completion, andthe Architect so confirms, the Ownershall, upon application by the Contractorand certification by the Architect, andwithout terminating the Contract, makepayment of the balance due for that por-tion of the Work fully completed andaccepted. If the remaining balance forWork not fully completed or corrected isless than retainage stipulated in theContract Documents, and if bonds havebeen furnished, the written consent ofsurety to payment of the balance duefor that portion of the Work fullycompleted and accepted shall be sub-mitted by the Contractor to the Architectprior to certification of such payment.Such payment shall be made under termsand conditions governing final payment,except that it shall not constitute a waiv-er of claims.

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The contractor and owner may, under somecircumstances, be held strictly liable forharm resulting from use or storage of suchhazardous materials—that is, liable even ifthey are not negligent.

whether in storage on or off the site,under care, custody or control of theContractor or the Contractor'sSubcontractors or Sub-subcontractors;and.3 other property at the site or adja-cent thereto, such as trees,shrubs, lawns, walks, pavements, road-ways, structures and utilities not desig-nated for removal, relocation or replace-ment in the course of construction.

10.2.2 The Contractor shall give noticesand comply with applicable laws, ordi-nances, rules, regulations and lawfulorders of public authorities bearing onsafety of persons or property or their pro-tection from damage, injury or loss.

10.2.3 The Contractor shall erect andmaintain, as required by existing condi-tions and performance of the Contract,reasonable safeguards for safety and pro-tection, including posting danger signsand other warnings against hazards, pro-mulgating safety regulations and notify-ing owners and users of adjacent sitesand utilities.

10.2.4 When use or storage of explo-sives or other hazardous materials orequipment or unusual methods are nec-essary for execution of the Work, theContractor shall exercise utmost careand carry on such activities under super-vision of properly qualified personnel.

10.2.5 The Contractor shall promptlyremedy damage and loss (other thandamage or loss insured under propertyinsurance required by the ContractDocuments) to property referred to inClauses 10.2.1.2 and 10.2.1.3 caused inwhole or in part by the Contractor, aSubcontractor, a Sub-subcontractor, or

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The owner waives all except the designatedclaims by making final payment to the con-tractor. While final payment is a milestone, itdoes not terminate certain important rightsof the owner. The exceptions preserve theserights.

Subparagraph 9.10.4 preserves rights ofthe owner that survive final payment includ-ing, in this case, rights under the warrantycontained in Paragraph 3.5 and during thecorrection period described in Paragraph12.2.

This provision requires each payee torestate specifically, in writing, unsettledclaims if they are to remain valid. This pre-cludes subsequent presentation of claimsthat were believed to have been settled, andalso new claims relating back to events priorto the date of the final application for pay-ment. This provision has no effect on claimsthat might arise after final payment.

Construction safety is the responsibility ofthe contractor. Subcontractors, in turn, areresponsible to the contractor for the safeperformance of their portions of the work.The owner (when performing work with itsown forces) and separate contractors havesimilar responsibilities under laws and regu-lations related to safety.

9.10.4 The making of final paymentshall constitute a waiver of Claims by theOwner except those arising from:.1 liens, Claims, security interestsor encumbrances arising out of theContract and unsettled;.2 failure of the Work to complywith the requirements of the ContractDocuments; or.3 terms of special warrantiesrequired by the Contract Documents.

9.10.5 Acceptance of final payment bythe Contractor, a Subcontractor or mate-rial supplier shall constitute a waiver ofclaims by that payee except those previ-ously made in writing and identified bythat payee as unsettled at the time offinal Application for Payment.

ARTICLE 10 PROTECTION OFPERSONS AND PROPERTY

10.1 SAFETY PRECAUTIONS ANDPROGRAMS10.1.1 The Contractor shall be respon-sible for initiating, maintaining andsupervising all safety precautions andprograms in connection with the perfor-mance of the Contract.

10.2 SAFETY OF PERSONS ANDPROPERTY10.2.1 The Contractor shall take reason-able precautions for safety of, and shallprovide reasonable protection to preventdamage, injury or loss to:.1 employees on the Work and otherpersons who may be affectedthereby;.2 the Work and materials andequipment to be incorporated therein,

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The superintendent is the contractor’s prin-cipal representative at the site and isresponsible for site safety, unless someoneelse is specifically designated to have thisresponsibility.

This includes temporary loads required byconstruction means and methods.

A practical standard is used instead of theterm “hazardous materials,” which has nouniform definition and could be interpretedto include numerous substances commonlyused in construction—for example, paint orgasoline.

It is important for the health of those work-ers and others who may be exposed to haz-ardous materials that work stop promptlyupon their discovery. Once it is deemed safeto do so, work may resume according to thewritten agreement of the owner and con-tractor.

anyone directly or indirectly employedby any of them, or by anyone for whoseacts they may be liable and for which theContractor is responsible under Clauses10.2.1.2 and 10.2.1.3, except damage orloss attributable to acts or omissions ofthe Owner or Architect or anyone direct-ly or indirectly employed by either ofthem, or by anyone for whose acts eitherof them may be liable, and not attribut-able to the fault or negligence of theContractor. The foregoing obligations ofthe Contractor are in addition to theContractor's obligations under Paragraph3.18.

10.2.6 The Contractor shall designate aresponsible member of the Contractor'sorganization at the site whose duty shallbe the prevention of accidents. This per-son shall be the Contractor's superinten-dent unless otherwise designated by theContractor in writing to the Owner andArchitect.

10.2.7 The Contractor shall not load orpermit any part of the construction orsite to be loaded so as to endanger itssafety.

10.3 HAZARDOUS MATERIALS10.3.1 If reasonable precautions willbe inadequate to prevent foreseeablebodily injury or death to personsresulting from a material or substance,including but not limited to asbestos orpolychlorinated biphenyl (PCB),encountered on the site by theContractor, the Contractor shall, uponrecognizing the condition, immediate-ly stop Work in the affected area andreport the condition to the Owner andArchitect in writing.

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If the contractor has notified the owner thata hazardous material is present, the ownermust retain a qualified laboratory to verifywhether such material is present. If haz-ardous materials do exist, the owner mustarrange for their removal or remediation.The owner cannot require the contractor toperform this service.

The owner and contractor may choose tonegotiate an appropriate adjustment in con-tract price and time or the contractor mayassert a claim if no negotiated agreementcan be reached. Unlike most other claims,claims relating to hazardous materials arenot referred to the architect for initial deter-mination, but proceed directly to mediationand then to arbitration.

This subparagraph, like other indemnifica-tion provisions, should be reviewed by legalcounsel before the agreement is executed.Numerous state statutes affect the enforce-ability of such provisions.

10.3.2 The Owner shall obtain the ser-vices of a licensed laboratory to verifythe presence or absence of the materialor substance reported by the Contractorand, in the event such material or sub-stance is found to be present, to verifythat it has been rendered harmless.Unless otherwise required by theContract Documents, the Owner shallfurnish in writing to the Contractor andArchitect the names and qualifications ofpersons or entities who are to performtests verifying the presence or absence ofsuch material or substance or who are toperform the task of removal or safe con-tainment of such material or substance.The Contractor and the Architect willpromptly reply to the Owner in writingstating whether or not either has reason-able objection to the persons or entitiesproposed by the Owner. If either theContractor or Architect has an objectionto a person or entity proposed by theOwner, the Owner shall propose anotherto whom the Contractor and theArchitect have no reasonable objection.When the material or substance has beenrendered harmless, Work in the affectedarea shall resume upon written agree-ment of the Owner and Contractor. TheContract Time shall be extendedappropriately and the Contract Sumshall be increased in the amount of theContractor's reasonable additionalcosts of shut-down, delay and start-up,which adjustments shall be accom-plished as provided in Article 7.

10.3.3 To the fullest extent permitted bylaw, the Owner shall indemnify and holdharmless the Contractor, Subcontractors,Architect, Architect's consultants andagents and employees of any of themfrom and against claims, damages, loss-es and expenses, including but not limit-

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Some federal or state statutes may imposeliability on persons who perform work onproperty which was previously contaminat-ed, even though that person was notresponsible for the initial contamination andproperly and safely performed the requiredwork. This provision makes the owner finan-cially responsible for costs and expensesincurred by a non-negligent contractor whoby law becomes responsible for remediationcosts. Like other indemnification provisions,this paragraph should be reviewed by legalcounsel.

As part of the contractor’s responsibility forconstruction means and methods and forjobsite safety, the contractor has the author-ity to act without prior authorization in anemergency.

ed to attorneys' fees, arising out of orresulting from performance of the Workin the affected area if in fact the materialor substance presents the risk of bodilyinjury or death as described inSubparagraph 10.3.1 and has not beenrendered harmless, provided that suchclaim, damage, loss or expense is attrib-utable to bodily injury, sickness, diseaseor death, or to injury to or destruction oftangible property (other than the Workitself) and provided that such damage,loss or expense is not due to the sole neg-ligence of a party seeking indemnity.

10.4 The Owner shall not be responsibleunder Paragraph 10.3 for materials andsubstances brought to the site by theContractor unless such materials or sub-stances were required by the ContractDocuments.

10.5 If, without negligence on the partof the Contractor, the Contractor is heldliable for the cost of remediation of ahazardous material or substance solelyby reason of performing Work asrequired by the Contract Documents, theOwner shall indemnify the Contractorfor all cost and expense thereby incurred.

10.6 EMERGENCIES10.6.1 In an emergency affecting safetyof persons or property, the Contractorshall act, at the Contractor's discretion,to prevent threatened damage, injury orloss. Additional compensation or exten-sion of time claimed by the Contractoron account of an emergency shall bedetermined as provided in Paragraph 4.3and Article 7.

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The provisions of this article commonlyrequire expansion in the supplementaryconditions. Insurance coverages that thecontractor is required to carry should beclearly stated in the contract documents sothat the contractor can accurately calculateits costs. The owner’s legal counsel andinsurance adviser should make appropriaterecommendations to the owner on insur-ance and bonds. The architect should obtaininformation from the owner on the neces-sary or desirable limits and coverage; AIADocument G612, Owner’s InstructionsRegarding Insurance and Bonds, has beendesigned for this purpose.

In an insurance context, personal injury isdifferent from bodily injury. Personal injuryincludes libel, slander and false arrest. Forexample, someone detained at the con-struction site could claim false arrest, or amaterial supplier could claim that commentsmade by the contractor or a subcontractorconstituted slander. Bodily injury involvesphysical harm to a person.

ARTICLE 11 INSURANCE ANDBONDS

11.1 CONTRACTOR'S LIABILITY INSURANCE 11.1.1 The Contractor shall purchasefrom and maintain in a company or com-panies lawfully authorized to do businessin the jurisdiction in which the Project islocated such insurance as will protect theContractor from claims set forth belowwhich may arise out of or result from theContractor's operations under theContract and for which the Contractormay be legally liable, whether such oper-ations be by the Contractor or by aSubcontractor or by anyone directly orindirectly employed by any of them, orby anyone for whose acts any of themmay be liable: .1 claims under workers' compen-sation, disability benefit and other simi-lar employee benefit acts which areapplicable to the Work to be performed;.2 claims for damages because ofbodily injury, occupational sickness ordisease, or death of the Contractor'semployees;.3 claims for damages because ofbodily injury, sickness or disease,or death of any person other than theContractor's employees;.4 claims for damages insured byusual personal injury liability coverage;

.5 claims for damages, other than tothe Work itself, because of injury to ordestruction of tangible property, includ-ing loss of use resulting therefrom; .6 claims for damages because ofbodily injury, death of a person orproperty damage arising out of owner-ship, maintenance or use of a motor vehi-cle;

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In an insurance context, the term “complet-ed operations” refers to property damage orbodily injury occurring after the contractorhas completed all work at the site. Forexample, drywall might be damaged as aresult of a roof leak occurring after finalcompletion.

The contractor agrees to hold the owner,architect and others harmless under certaincircumstances. This provision requiresinsurance to fulfill that requirement.

Coverage refers to the types of claims towhich the insurance is applicable.Subparagraph 11.1.1 specifies requiredcoverages. Limits of liability refers to themaximum dollar figure that the insurancecompany will potentially pay. Required limitsof liability are either specified by law or inthe contract documents.

Subparagraph 8.2.2 states that the contrac-tor may not begin work prior to the effectivedate of the insurance required here.Subparagraph 9.10.2 discusses insurancerequirements in relation to final payment.

This 30-day period gives the owner anopportunity to purchase replacement cover-age or take other actions prior to the date onwhich the contractor’s insurance expires.Insurance companies commonly agree toprovide such notice.

.7 claims for bodily injury or prop-erty damage arising out ofcompleted operations; and

.8 claims involving contractual lia-bility insurance applicable tothe Contractor's obligations underParagraph 3.18.

11.1.2 The insurance required bySubparagraph 11.1.1 shall be written fornot less than limits of liability specifiedin the Contract Documents orrequired by law, whichever coverage isgreater. Coverages, whether written onan occurrence or claims-made basis,shall be maintained without interruptionfrom date of commencement of the Workuntil date of final payment and termina-tion of any coverage required to be main-tained after final payment.

11.1.3 Certificates of insurance accept-able to the Owner shall be filed with theOwner prior to commencement of theWork. These certificates and the insur-ance policies required by this Paragraph11.1 shall contain a provision that cover-ages afforded under the policies will notbe canceled or allowed to expire until atleast 30 days' prior written notice hasbeen given to the Owner. If any of theforegoing insurance coverages arerequired to remain in force after finalpayment and are reasonably available, anadditional certificate evidencing continu-ation of such coverage shall be submittedwith the final Application for Payment asrequired by Subparagraph 9.10.2.

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Many insurance policies have aggregatelimits of liability that limit the amountpayable by the insurer on all claims againstthe insured (in this case, the contractor) dur-ing the policy period. Aggregate insurancelimits required by the contract documentsmay be reduced or exhausted altogether byclaims against the contractor on other pro-jects. If this occurs, the contractor is obligat-ed to promptly notify the owner.

Project Management Protective Liabilityinsurance (PMPL) is similar to Owners andContractors Protective Liability insurance(OCP), but broader in that the architect andconstruction manager are also covered asinsureds. This policy affords the coveragefor claims arising out of the acts or omis-sions of persons for whom the insureds arealleged to be responsible. For example, ifthe architect or contractor were suedbecause of the negligence of a subcontrac-tor, contractor or a consultant of the archi-tect, this policy would afford primary cover-age. The other insurance carried by theinsureds would be secondary coverage torespond to such claims if the insuranceafforded by this policy were exhausted.Because PMPL insurance covers a numberof the principal participants on the project, itis anticipated that it will reduce the frequen-cy of disputes that arise from these insuredrisks.

Information concerning reduction ofcoverage on account of revised limits orclaims paid under the GeneralAggregate, or both, shall be furnishedby the Contractor with reasonablepromptness in accordance with theContractor's information and belief.

11.2 OWNER'S LIABILITYINSURANCE11.2.1 The Owner shall be responsiblefor purchasing and maintaining theOwner's usual liability insurance.

11.3 PROJECT MANAGEMENTPROTECTIVE LIABILITY INSURANCE11.3.1 Optionally, the Owner mayrequire the Contractor to purchase andmaintain Project Management ProtectiveLiability insurance from the Contractor’susual sources as primary coverage forthe Owner’s, Contractor’s andArchitect’s vicarious liability for con-struction operations under the Contract.Unless otherwise required by theContract Documents, the Owner shallreimburse the Contractor by increasingthe Contract Sum to pay the cost of pur-chasing and maintaining such optionalinsurance coverage, and the Contractorshall not be responsible for purchasingany other liability insurance on behalf ofthe Owner. The minimum limits of lia-bility purchased with such coverage shallbe equal to the aggregate of the limitsrequired for Contractor’s LiabilityInsurance under Clauses 11.1.1.2through 11.1.1.5.

11.3.2 To the extent damages are cov-ered by Project Management ProtectiveLiability insurance, the Owner,Contractor and Architect waive all rightsagainst each other for damages, except

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Some owners have required contractors toname them as additional insureds under thecontractor’s liability policy. While some addi-tional protection may be gained in this way,it ultimately increases the cost of insuranceto the contractor without measurably reduc-ing the risk of disputes on the project. Thispractice has been precluded by this provi-sion, whether or not the Owner elects torequire Project Management ProtectiveLiability insurance.

If the contractor, rather than the owner, isrequired to provide property insurance, sub-stantial modification to Paragraph 11.4 willbe needed so that proper coverages areobtained to protect the interests of all par-ties, including those of the owner (who maybe doing work with the owner’s own forces)and of separate contractors.

“All-risk” coverage is usually contrasted withnamed-peril coverage. “All-risk” coverageincludes everything but specifically exclud-ed risks. Named-peril coverage, on theother hand, names those perils that areinsured against and excludes all other risks.Both types of policies should be reviewedcarefully by the owner’s insurance adviser.

such rights as they may have to the pro-ceeds of such insurance. The policy shallprovide for such waivers of subrogationby endorsement or otherwise.

11.3.3 The Owner shall not require theContractor to include the Owner,Architect or other persons or entities asadditional insureds on the Contractor’sLiability Insurance coverage underParagraph 11.1.

11.4 PROPERTY INSURANCE11.4.1 Unless otherwise provided, theOwner shall purchase and maintain, in acompany or companies lawfully autho-rized to do business in the jurisdiction inwhich the Project is located, propertyinsurance written on a builder's risk "all-risk" or equivalent policy form in theamount of the initial Contract Sum, plusvalue of subsequent Contract modifica-tions and cost of materials supplied orinstalled by others, comprising totalvalue for the entire Project at the site ona replacement cost basis without option-al deductibles. Such property insuranceshall be maintained, unless otherwiseprovided in the Contract Documents orotherwise agreed in writing by all per-sons and entities who are beneficiaries ofsuch insurance, until final payment hasbeen made as provided in Paragraph 9.10or until no person or entity other than theOwner has an insurable interest in theproperty required by this Paragraph11.4 to be covered, whichever is later.This insurance shall include interests ofthe Owner, the Contractor,Subcontractors and Sub-subcontractorsin the Project.

11.4.1.1 Property insurance shall be onan "all-risk" or equivalent policy formand shall include, without limitation,

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The owner must either purchase the insur-ance required by the general conditions orinform the contractor that it does not intendto do so. The contractor then has the oppor-tunity to purchase equivalent insurance andis entitled to a change order to cover thecosts. If the owner neither buys the insur-ance nor notifies the contractor, the ownereffectively becomes the insurer and will beresponsible for costs attributable to losseswhich would have been covered had therequired insurance been purchased.

In the 1987 edition of AIA Document A201,the contractor bore costs not coveredbecause of deductibles. In A201-1997,these costs are assigned to the owner, whodirectly obtains the benefit of the lower pre-miums associated with the deductibles.

insurance against the perils of fire (withextended coverage) and physical loss ordamage including, without duplicationof coverage, theft, vandalism, maliciousmischief, collapse, earthquake, flood,windstorm, falsework, testing and start-up, temporary buildings and debrisremoval including demolition occa-sioned by enforcement of any applicablelegal requirements, and shall cover rea-sonable compensation for Architect's andContractor's services and expensesrequired as a result of such insured loss.

11.4.1.2 If the Owner does not intendto purchase such property insurancerequired by the Contract and with allof the coverages in the amount describedabove, the Owner shall so inform theContractor in writing prior to com-mencement of the Work. The Contractormay then effect insurance which willprotect the interests of the Contractor,Subcontractors and Sub-subcontractorsin the Work, and by appropriate ChangeOrder the cost thereof shall be charged tothe Owner. If the Contractor is damagedby the failure or neglect of the Owner topurchase or maintain insurance asdescribed above, without so notifyingthe Contractor in writing, then theOwner shall bear all reasonable costsproperly attributable thereto.

11.4.1.3 If the property insurancerequires deductibles, the Owner shallpay costs not covered because of suchdeductibles.

11.4.1.4 This property insurance shallcover portions of the Work stored off thesite, and also portions of the Work intransit.

11.4.1.5 Partial occupancy or use in

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The contractor may wish to have certaincoverages in place in addition to thoserequired by the standard provisions. It maybe more efficient and cost-effective to havethese coverages included in the project’sproperty insurance policy. Costs associatedwith the contractor’s request must be borneby the contractor and reflected in a changeorder reducing the contract sum.

accordance with Paragraph 9.9 shall notcommence until the insurance companyor companies providing property insur-ance have consented to such partialoccupancy or use by endorsement or oth-erwise. The Owner and the Contractorshall take reasonable steps to obtain con-sent of the insurance company or compa-nies and shall, without mutual writtenconsent, take no action with respect topartial occupancy or use that wouldcause cancellation, lapse or reduction ofinsurance.

11.4.2 Boiler and MachineryInsurance. The Owner shall purchaseand maintain boiler and machineryinsurance required by the ContractDocuments or by law, which shall specif-ically cover such insured objects duringinstallation and until final acceptance bythe Owner; this insurance shall includeinterests of the Owner, Contractor,Subcontractors and Sub-subcontractorsin the Work, and the Owner andContractor shall be named insureds.

11.4.3 Loss of Use Insurance. TheOwner, at the Owner's option, may pur-chase and maintain such insurance aswill insure the Owner against loss of useof the Owner's property due to fire orother hazards, however caused. TheOwner waives all rights of action againstthe Contractor for loss of use of theOwner's property, including consequen-tial losses due to fire or other hazardshowever caused.

11.4.4 If the Contractor requests in writ-ing that insurance for risks other thanthose described herein or other specialcauses of loss be included in the prop-erty insurance policy, the Owner shall,if possible, include such insurance, and

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This subparagraph extends the provisionsfor waiver of subrogation to other propertyinsurance the owner may purchase. Suchpolicies may cover property at or adjacent tothe project site, or they may replace theproperty insurance that was in effect on thework during construction.

Subparagraph 11.1.3 contains very similarrequirements regarding the contractor’s lia-bility insurance. However, the contractorneed only supply the owner with certificatesof insurance under that provision. Here theowner must supply the contractor with acopy of each policy, including all conditions,definitions, exclusions and endorsementsrelating to the project. The actual policiesare required because numerous detailscontained in a property insurance policywould not be reflected in a certificate.

the cost thereof shall be charged to theContractor by appropriate Change Order.

11.4.5 If during the Project constructionperiod the Owner insures properties, realor personal or both, at or adjacent to thesite by property insurance under policiesseparate from those insuring the Project,or if after final payment property insur-ance is to be provided on the completedProject through a policy or policies otherthan those insuring the Project during theconstruction period, the Owner shallwaive all rights in accordance with theterms of Subparagraph 11.4.7 for dam-ages caused by fire or other causes ofloss covered by this separate propertyinsurance. All separate policies shallprovide this waiver of subrogation byendorsement or otherwise.

11.4.6 Before an exposure to loss mayoccur, the Owner shall file with theContractor a copy of each policy thatincludes insurance coverages required bythis Paragraph 11.4. Each policy shallcontain all generally applicable condi-tions, definitions, exclusions andendorsements related to this Project.Each policy shall contain a provision thatthe policy will not be canceled orallowed to expire, and that its limits willnot be reduced, until at least 30 days'prior written notice has been given to theContractor.

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Subrogation is the right to “stand in theshoes” of another and to claim whateverrights the original person or entity had. Thepurpose of the required property insuranceis to transfer the risk of insured losses fromthe owner and contractor to the insurancecompany. It would defeat this purpose if theinsurance company were allowed to sueeither party to recover such losses.

In general, it is possible to waive rights ofsubrogation as long as this is done beforeany loss occurs. The owner should disclosethe waiver of subrogation provision to theinsurer before purchasing the propertyinsurance.

If the contractor or a subcontractor hasrights to insurance proceeds being held bythe owner as a fiduciary underSubparagraph 11.4.8, such rights are notaffected by this waiver.

As a fiduciary, the owner holds the insur-ance proceeds in trust for those personswho sustained an insured loss. This normal-ly includes the contractor, subcontractorsand may include the project architect. Amortgagee, such as the construction lender,may also have rights that appear in themortgagee clause of the insurance. Oncethe contractor receives payment, it isrequired to pay its subcontractors and sup-pliers their allocable share of the proceeds.

11.4.7 Waivers of Subrogation. TheOwner and Contractor waive all rightsagainst (1) each other and any of theirsubcontractors, sub-subcontractors,agents and employees, each of the other,and (2) the Architect, Architect's consul-tants, separate contractors described inArticle 6, if any, and any of their subcon-tractors, sub-subcontractors, agents andemployees, for damages caused by fireor other causes of loss to the extent cov-ered by property insurance obtained pur-suant to this Paragraph 11.4 or otherproperty insurance applicable to theWork, except such rights as they haveto proceeds of such insurance held bythe Owner as fiduciary. The Owner orContractor, as appropriate, shall requireof the Architect, Architect's consultants,separate contractors described in Article6, if any, and the subcontractors, sub-subcontractors, agents and employees ofany of them, by appropriate agreements,written where legally required for validi-ty, similar waivers each in favor of otherparties enumerated herein. The policiesshall provide such waivers of subroga-tion by endorsement or otherwise. Awaiver of subrogation shall be effectiveas to a person or entity even though thatperson or entity would otherwise have aduty of indemnification, contractual orotherwise, did not pay the insurance pre-mium directly or indirectly, and whetheror not the person or entity had an insur-able interest in the property damaged.

11.4.8 A loss insured under Owner'sproperty insurance shall be adjusted bythe Owner as fiduciary and madepayable to the Owner as fiduciary forthe insureds, as their interests mayappear, subject to requirements of anyapplicable mortgagee clause and ofSubparagraph 11.4.10. The Contractor

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After an insured loss, the owner generallyhas two choices: (1) terminate the contractfor convenience and keep the insuranceproceeds (less amounts payable to the con-tractor and others) or (2) issue a changeorder under which the contractor is com-pensated for reconstructing damaged ordestroyed work. The amount payable to thecontractor is not limited to or determined bythe insurance proceeds.

shall pay Subcontractors their just sharesof insurance proceeds received by theContractor, and by appropriate agree-ments, written where legally required forvalidity, shall require Subcontractors tomake payments to their Sub-subcontrac-tors in similar manner.

11.4.9 If required in writing by a partyin interest, the Owner as fiduciary shall,upon occurrence of an insured loss, givebond for proper performance of theOwner's duties. The cost of requiredbonds shall be charged against proceedsreceived as fiduciary. The Owner shalldeposit in a separate account proceeds soreceived, which the Owner shall distrib-ute in accordance with such agreementas the parties in interest may reach, or inaccordance with an arbitration award inwhich case the procedure shall be as pro-vided in Paragraph 4.6. If after suchloss no other special agreement ismade and unless the Owner termi-nates the Contract for convenience,replacement of damaged propertyshall be performed by the Contractorafter notification of a Change in theWork in accordance with Article 7.

11.4.10 The Owner as fiduciary shallhave power to adjust and settle a losswith insurers unless one of the parties ininterest shall object in writing within fivedays after occurrence of loss to theOwner's exercise of this power; if suchobjection is made, the dispute shall beresolved as provided in Paragraphs 4.5and 4.6. The Owner as fiduciary shall, inthe case of arbitration, make settlementwith insurers in accordance with direc-tions of the arbitrators. If distribution ofinsurance proceeds by arbitration isrequired, the arbitrators will direct suchdistribution.

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If the owner wants the contractor to providea performance bond and payment bond,that fact and the appropriate conditions ofthe bonds must be included in the biddingrequirements or in the contract documentsprior to the time the contract is signed sothat their costs can be considered in deter-mining the contract sum.

The owner’s legal counsel and insuranceadviser should advise on the need forbonds.

AIA Document A701, Instructions toBidders, addresses the topic of bonds. AIADocument A312, Performance Bond andPayment Bond, is available for use if suchbonds are required.

The contract documents should list clearlythose items the architect expects to exam-ine before they are covered.

Ultimate responsibility for the cost of uncov-ering, testing and replacing questionedwork under this subparagraph dependsupon whether the uncovered work complieswith the contract documents.

11.5 PERFORMANCE BONDAND PAYMENT BOND 11.5.1 The Owner shall have the right torequire the Contractor to furnish bondscovering faithful performance of theContract and payment of obligationsarising thereunder as stipulated in bid-ding requirements or specificallyrequired in the Contract Documents onthe date of execution of the Contract.

11.5.2 Upon the request of any person orentity appearing to be a potential benefi-ciary of bonds covering payment ofobligations arising under the Contract,the Contractor shall promptly furnish acopy of the bonds or shall permit a copyto be made.

ARTICLE 12 UNCOVERING ANDCORRECTION OF WORK

12.1 UNCOVERING OF WORK12.1.1 If a portion of the Work is cov-ered contrary to the Architect's request orto requirements specifically expressedin the Contract Documents, it must, ifrequired in writing by the Architect, beuncovered for the Architect's examina-tion and be replaced at the Contractor'sexpense without change in the ContractTime.

12.1.2 If a portion of the Work has beencovered which the Architect has notspecifically requested to examine priorto its being covered, the Architect mayrequest to see such Work and it shall beuncovered by the Contractor. If suchWork is in accordance with theContract Documents, costs of uncov-ering and replacement shall, by appro-priate Change Order, be at theOwner’s expense. If such Work is notin accordance with the Contract

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Work that does not meet the requirementsof the contract documents may be rejectedeven if it has not yet been installed or is onlypartially completed. The architect also hasthe option of advising the contractor thatwork in process, if continued, will not pro-duce acceptable results.

The contractor must correct work that doesnot conform to the requirements of the con-tract documents even if such work has notbeen rejected by the architect.

Under Subparagraph 12.2.4, such costsinclude costs of removing, replacing andrepairing other work or construction of theowner or separate contractors as needed tocorrect rejected or nonconforming work.

The contractor’s warranty extends until theexpiration of the applicable statute of limita-tions period. The correction perioddescribed in Subparagraph 12.2.2 is a sep-arate remedy for nonconforming work. Toavoid misunderstandings, the introductorylanguage makes it clear that the one-yearcorrection period is in addition to, and not inlieu of, the contractor’s warranty obligations.During the correction period, the ownermust give the contractor prompt notice ofand the opportunity to correct work discov-ered not to have been performed in accor-dance with the contract documents.Thereafter, the owner may have the correc-tive work performed by anyone selected bythe owner.

During the one-year correction period, thecontractor has the right to be notified aboutdefective work. If the owner discovers non-conforming work and fails to notify the con-tractor, the owner waives its right againstthe contractor to require correction of thatwork and its warranty right with respect tothat work.

Documents, correction shall be at theContractor’s expense unless the condi-tion was caused by the Owner or a sepa-rate contractor in which event the Ownershall be responsible for payment of suchcosts.

12.2 CORRECTION OF WORK

12.2.1 BEFORE OR AFTER SUBSTANTIAL COMPLETION12.2.1.1 The Contractor shall promptlycorrect Work rejected by the Architector failing to conform to the require-ments of the Contract Documents,whether discovered before or afterSubstantial Completion and whether ornot fabricated, installed or completed.Costs of correcting such rejectedWork, including additional testing andinspections and compensation for theArchitect's services and expenses madenecessary thereby, shall be at theContractor’s expense.

12.2.2 AFTER SUBSTANTIALCOMPLETION12.2.2.1 In addition to theContractor's obligations underParagraph 3.5, if, within one year afterthe date of Substantial Completion of theWork or designated portion thereof orafter the date for commencement of war-ranties established under Subparagraph9.9.1, or by terms of an applicable spe-cial warranty required by the ContractDocuments, any of the Work is found tobe not in accordance with the require-ments of the Contract Documents, theContractor shall correct it promptly afterreceipt of written notice from the Ownerto do so unless the Owner has previously

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The contractor must act to correct workwithin a reasonable time.

Work first performed after substantial com-pletion is also subject to a one-year correc-tion period, in effect extending the correc-tion period with respect to that work.

When work corrected by the contractor dur-ing the correction period needs further cor-rection more than one year after substantialcompletion, the owner is not obligated tonotify the contractor again, but may have thework performed by others.

The contractor’s activities in correcting workdo not extend the correction period.

given the Contractor a written accep-tance of such condition. The Ownershall give such notice promptly afterdiscovery of the condition. During theone-year period for correction ofWork, if the Owner fails to notify theContractor and give the Contractor anopportunity to make the correction,the Owner waives the rights to requirecorrection by the Contractor and tomake a claim for breach of warranty.If the Contractor fails to correct noncon-forming Work within a reasonable timeduring that period after receipt of noticefrom the Owner or Architect, the Ownermay correct it in accordance withParagraph 2.4.

12.2.2.2 The one-year period for correc-tion of Work shall be extended withrespect to portions of Work first per-formed after Substantial Completion bythe period of time between SubstantialCompletion and the actual performanceof the Work.

12.2.2.3 The one-year period for cor-rection of Work shall not be extendedby corrective Work performed by theContractor pursuant to this Paragraph12.2.

12.2.3 The Contractor shall removefrom the site portions of the Work whichare not in accordance with the require-ments of the Contract Documents andare neither corrected by the Contractornor accepted by the Owner.

12.2.4 The Contractor shall bear thecost of correcting destroyed or damagedconstruction, whether completed or par-tially completed, of the Owner or sepa-rate contractors caused by theContractor's correction or removal of

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Only the owner can accept nonconformingwork because such acceptance constitutesa change in the contract. If the contract sumis to be reduced, this must be done by achange order.

Work which is not in accordance withthe requirements of the ContractDocuments.

12.2.5 Nothing contained in thisParagraph 12.2 shall be construed toestablish a period of limitation withrespect to other obligations which theContractor might have under theContract Documents. Establishment ofthe one-year period for correction ofWork as described in Subparagraph12.2.2 relates only to the specific obliga-tion of the Contractor to correct theWork, and has no relationship to the timewithin which the obligation to complywith the Contract Documents may besought to be enforced, nor to the timewithin which proceedings may be com-menced to establish the Contractor's lia-bility with respect to the Contractor'sobligations other than specifically to cor-rect the Work.

12.3 ACCEPTANCE OF NONCONFORMING WORK12.3.1 If the Owner prefers to acceptWork which is not in accordance withthe requirements of the ContractDocuments, the Owner may do soinstead of requiring its removal and cor-rection, in which case the Contract Sumwill be reduced as appropriate and equi-table. Such adjustment shall be effectedwhether or not final payment has beenmade.

ARTICLE 13 MISCELLANEOUSPROVISIONS

13.1 GOVERNING LAW13.1.1 The Contract shall be governedby the law of the place where the Projectis located.

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At times, a contractor may want to assign toa major creditor money due or to becomedue under the contract. This is not prohibit-ed by this provision since it is only anassignment of the right to receive moneyand not an assignment of the contract as awhole. However, state or federal law mayaffect a contractor’s right to assign moneydue under a public contract.

This is an exception to prohibition of assign-ment of the contract as a whole, as dis-cussed in Subparagraph 13.2.1. Institutionallenders often require contingent assignmentof the contract as a condition of the con-struction loan. Without this provision, theproject might have to be terminated by theowner, who may not be able to finance theproject without such an assignment. On theother hand, the lender cannot condition theassignment on any waiver of rights on thepart of the contractor, such as the right to bepaid by the lender for pre-default sums dueand owing the contractor.

If these requirements are met, notice willhave been effectively given, whether or notactually received.

13.2 SUCCESSORS ANDASSIGNS13.2.1 The Owner and Contractorrespectively bind themselves, their part-ners, successors, assigns and legal repre-sentatives to the other party hereto and topartners, successors, assigns and legalrepresentatives of such other party inrespect to covenants, agreements andobligations contained in the ContractDocuments. Except as provided inSubparagraph 13.2.2, neither party to theContract shall assign the Contract as awhole without written consent of theother. If either party attempts to makesuch an assignment without such con-sent, that party shall nevertheless remainlegally responsible for all obligationsunder the Contract.

13.2.2 The Owner may, without consentof the Contractor, assign the Contractto an institutional lender providingconstruction financing for the Project. Insuch event, the lender shall assume theOwner's rights and obligations under theContract Documents. The Contractorshall execute all consents reasonablyrequired to facilitate such assignment.

13.3 WRITTEN NOTICE 13.3.1 Written notice shall be deemedto have been duly served if delivered inperson to the individual or a member ofthe firm or entity or to an officer of thecorporation for which it was intended, orif delivered at or sent by registered orcertified mail to the last business addressknown to the party giving notice.

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This is to avoid having the contract modifiedby a party’s action or failure to act.

Normally, the contractor may not conducttests and inspections or grant approvals ofits own work.

This subparagraph covers special tests,inspections or approvals determined to benecessary due to developments in thecourse of construction. For example, testson one part of the work may call into ques-tion the integrity of other parts.

13.4 RIGHTS AND REMEDIES13.4.1 Duties and obligations imposedby the Contract Documents and rightsand remedies available thereunder shallbe in addition to and not a limitation ofduties, obligations, rights and remediesotherwise imposed or available by law.

13.4.2 No action or failure to act by theOwner, Architect or Contractor shallconstitute a waiver of a right or dutyafforded them under the Contract, norshall such action or failure to act consti-tute approval of or acquiescence in abreach thereunder, except as may bespecifically agreed in writing.

13.5 TESTS AND INSPECTIONS13.5.1 Tests, inspections and approvalsof portions of the Work required by theContract Documents or by laws, ordi-nances, rules, regulations or orders ofpublic authorities having jurisdictionshall be made at an appropriate time.Unless otherwise provided, theContractor shall make arrangements forsuch tests, inspections and approvalswith an independent testing laborato-ry or entity acceptable to the Owner,or with the appropriate public author-ity, and shall bear all related costs oftests, inspections and approvals. TheContractor shall give the Architect time-ly notice of when and where tests andinspections are to be made so that theArchitect may be present for such pro-cedures. The Owner shall bear costs oftests, inspections or approvals which donot become requirements until after bidsare received or negotiations concluded.

13.5.2 If the Architect, Owner or publicauthorities having jurisdiction determinethat portions of the Work require addi-tional testing, inspection or approval

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not included under Subparagraph 13.5.1,the Architect will, upon written autho-rization from the Owner, instruct theContractor to make arrangements forsuch additional testing, inspection orapproval by an entity acceptable to theOwner, and the Contractor shall givetimely notice to the Architect of whenand where tests and inspections are to bemade so that the Architect may be pre-sent for such procedures. Such costs,except as provided in Subparagraph13.5.3, shall be at the Owner’s expense.

13.5.3 If such procedures for testing,inspection or approval underSubparagraphs 13.5.1 and 13.5.2 revealfailure of the portions of the Work tocomply with requirements established bythe Contract Documents, all costs madenecessary by such failure including thoseof repeated procedures and compensa-tion for the Architect's services andexpenses shall be at the Contractor’sexpense.

13.5.4 Required certificates of testing,inspection or approval shall, unless oth-erwise required by the ContractDocuments, be secured by theContractor and promptly delivered to theArchitect.

13.5.5 If the Architect is to observe tests,inspections or approvals required by theContract Documents, the Architect willdo so promptly and, where practicable, atthe normal place of testing.

13.5.6 Tests or inspections conductedpursuant to the Contract Documentsshall be made promptly to avoid unrea-sonable delay in the Work.

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To avoid confusion as to what the “rate pre-vailing from time to time” is, an agreed-uponrate of interest may be stated in the agree-ment. The parties should consult legal coun-sel regarding usury laws and other federaland state requirements that may apply.

The agreed-upon rate may be entered inParagraph 7.2 of AIA Document A101,Owner-Contractor Agreement Form,Stipulated Sum, if it is used.

The statute of limitations in all jurisdictionsstarts when a claim has accrued. In manyjurisdictions, a claim “accrues” when theharm caused has been discovered by theinnocent party. This is called the “discoveryrule.” These provisions eliminate the discov-ery rule by providing that the statute of limi-tations begins on the date of the contractu-ally specified occurrence. For example, thestatute of limitations begins to run on thedate of substantial completion for noncon-forming work performed before substantialcompletion, even though the nonconformingwork may not be discovered until yearslater.

13.6 INTEREST13.6.1 Payments due and unpaid underthe Contract Documents shall bear inter-est from the date payment is due at suchrate as the parties may agree upon inwriting or, in the absence thereof, at thelegal rate prevailing from time to time atthe place where the Project is located.

13.7 COMMENCEMENT OFSTATUTORY LIMITATION PERIOD 13.7.1 As between the Owner andContractor:.1 Before Substantial Completion. Asto acts or failures to act occurring priorto the relevant date of SubstantialCompletion, any applicable statute oflimitations shall commence to run andany alleged cause of action shall bedeemed to have accrued in any and allevents not later than such date ofSubstantial Completion;.2 Between Substantial Completionand Final Certificate for Payment. Asto acts or failures to act occurring subse-quent to the relevant date of SubstantialCompletion and prior to issuance of thefinal Certificate for Payment, any applic-able statute of limitations shall com-mence to run and any alleged cause ofaction shall be deemed to have accruedin any and all events not later than thedate of issuance of the final Certificatefor Payment; and.3 After Final Certificate forPayment. As to acts or failures to actoccurring after the relevant date ofissuance of the final Certificate forPayment, any applicable statute of limi-tations shall commence to run and anyalleged cause of action shall be deemed

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If the contractor or any of the other entities described here are responsible for the workstoppage, the contractor has no right to ter-minate the contract under this subpara-graph. Even when the contractor is blame-less, one of the four reasons listed mustapply in order to justify termination by thecontractor under this subparagraph.

The local building department and fire mar-shal are examples of “other public authority.”

If the contractor stops work in accordancewith Subparagraph 9.7.1, the contractormust wait an additional 30 days before ter-minating the contract.

to have accrued in any and all events notlater than the date of any act or failure toact by the Contractor pursuant to anyWarranty provided under Paragraph 3.5,the date of any correction of the Work orfailure to correct the Work by theContractor under Paragraph 12.2, or thedate of actual commission of any otheract or failure to perform any duty orobligation by the Contractor or Owner,whichever occurs last.

ARTICLE 14 TERMINATION ORSUSPENSION OF THE CONTRACT

14.1 TERMINATION BY THECONTRACTOR14.1.1 The Contractor may terminate theContract if the Work is stopped for aperiod of 30 consecutive days throughno act or fault of the Contractor or aSubcontractor, Sub-subcontractor ortheir agents or employees or any otherpersons or entities performing por-tions of the Work under direct or indi-rect contract with the Contractor, forany of the following reasons:.1 issuance of an order of a court orother public authority having jurisdic-tion which requires all Work to bestopped;.2 an act of government, such as adeclaration of national emergencywhich requires all Work to be stopped; .3 because the Architect has notissued a Certificate for Payment and hasnot notified the Contractor of the reasonfor withholding certification as providedin Subparagraph 9.4.1, or because theOwner has not made payment on aCertificate for Payment within the timestated in the Contract Documents; or.4 the Owner has failed to furnish tothe Contractor promptly, upon the

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The contractor must give seven days’ writ-ten notice (in addition to the 30-day periodduring which the work was stopped) to theowner and architect before terminating thecontract.

The seven days are in addition to the 60days during which the work is stopped.

Contractor's request, reasonable evi-dence as required by Subparagraph2.2.1.

14.1.2 The Contractor may terminate theContract if, through no act or fault of theContractor or a Subcontractor, Sub-sub-contractor or their agents or employeesor any other persons or entities perform-ing portions of the Work under direct orindirect contract with the Contractor,repeated suspensions, delays or interrup-tions of the entire Work by the Owner asdescribed in Paragraph 14.3 constitute inthe aggregate more than 100 percent ofthe total number of days scheduled forcompletion, or 120 days in any 365-dayperiod, whichever is less.

14.1.3 If one of the reasons described inSubparagraph 14.1.1 or 14.1.2 exists, theContractor may, upon seven days' writ-ten notice to the Owner and Architect,terminate the Contract and recover fromthe Owner payment for Work executedand for proven loss with respect to mate-rials, equipment, tools, and constructionequipment and machinery, including rea-sonable overhead, profit and damages.

14.1.4 If the Work is stopped for a peri-od of 60 consecutive days through no actor fault of the Contractor or aSubcontractor or their agents or employ-ees or any other persons performing por-tions of the Work under contract with theContractor because the Owner has per-sistently failed to fulfill the Owner'sobligations under the ContractDocuments with respect to mattersimportant to the progress of the Work,the Contractor may, upon seven addi-tional days' written notice to the Ownerand the Architect, terminate the Contractand recover from the Owner as provided

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Isolated instances of insufficient numbers ofworkers or improper materials will not justifytermination under this clause.

Such conduct must be persistent. Isolatedinfractions will not justify termination underthis clause.

The architect must exercise professionaljudgment to decide in good faith if sufficientcause exists to terminate the contract withthe contractor. This serves to protect thecontractor against unreasonable action bythe owner and serves to protect the ownerfrom the consequences of acting prema-turely.

The bonds should be carefully reviewed bythe owner’s legal counsel so that properaction will be taken to preserve the owner’srights.

This accounting affords evidence of theamount to be deducted from the contractsum on account of the contractor’s default.

in Subparagraph 14.1.3.

14.2 TERMINATION BY THEOWNER FOR CAUSE14.2.1 The Owner may terminate theContract if the Contractor:.1 persistently or repeatedlyrefuses or fails to supply enough proper-ly skilled workers or proper materials;.2 fails to make payment toSubcontractors for materials or labor inaccordance with the respective agree-ments between the Contractor and theSubcontractors;.3 persistently disregards laws,ordinances, or rules, regulations ororders of a public authority having juris-diction; or.4 otherwise is guilty of substantialbreach of a provision of the ContractDocuments.

14.2.2 When any of the above reasonsexist, the Owner, upon certification bythe Architect that sufficient causeexists to justify such action, may withoutprejudice to any other rights or remediesof the Owner and after giving theContractor and the Contractor's surety,if any, seven days' written notice, termi-nate employment of the Contractor andmay, subject to any prior rights of thesurety:.1 take possession of the site and ofall materials, equipment, tools, and con-struction equipment and machinerythereon owned by the Contractor;.2 accept assignment of subbcon-tracts pursuant to Paragraph 5.4; and.3 finish the Work by whatever rea-sonable method the Owner may deemexpedient. Upon request of theContractor, the Owner shall furnish tothe Contractor a detailed accounting of

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The damages mentioned in this subpara-graph are subject to the mutual waiver ofconsequential damages contained inSubparagraph 4.3.10.

Such orders may be given as the ownerdeems prudent, though they are required tobe in writing. Note that repeated suspen-sions, delays or interruptions may begrounds for termination by the contractorunder Subparagraph 14.1.2.

The contractor is entitled to an adjustmentin the contract sum and contract time forincreases in the cost and time needed forperformance resulting from the owner’sorder under Subparagraph 14.3.1.

the costs incurred by the Owner in fin-ishing the Work.

14.2.3 When the Owner terminates theContract for one of the reasons stated inSubparagraph 14.2.1, the Contractorshall not be entitled to receive furtherpayment until the Work is finished.

14.2.4 If the unpaid balance of theContract Sum exceeds costs of finishingthe Work, including compensation forthe Architect's services and expensesmade necessary thereby, and other dam-ages incurred by the Owner and notexpressly waived, such excess shall bepaid to the Contractor. If such costs anddamages exceed the unpaid balance, theContractor shall pay the difference to theOwner. The amount to be paid to theContractor or Owner, as the case may be,shall be certified by the Architect, uponapplication, and this obligation for pay-ment shall survive termination of theContract.

14.3 SUSPENSION BY THEOWNER FOR CONVENIENCE 14.3.1 The Owner may, without cause,order the Contractor in writing to sus-pend, delay or interrupt the Work inwhole or in part for such period of timeas the Owner may determine.

14.3.2 The Contract Sum and ContractTime shall be adjusted for increases inthe cost and time caused by suspension,delay or interruption as described inSubparagraph 14.3.1. Adjustment of theContract Sum shall include profit. Noadjustment shall be made to the extent:.1 that performance is, was orwould have been so suspended, delayedor interrupted by another cause for whichthe Contractor is responsible; or

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.2 that an equitable adjustment ismade or denied under another provisionof the Contract.

14.4 TERMINATION BY THEOWNER FOR CONVENIENCE14.4.1 The Owner may, at any time,terminate the Contract for the Owner'sconvenience and without cause.

14.4.2 Upon receipt of written noticefrom the Owner of such termination forthe Owner's convenience, theContractor shall:.1 cease operations as directed bythe Owner in the notice;.2 take actions necessary, or thatthe Owner may direct, for the protectionand preservation of the Work; and.3 except for Work directed to beperformed prior to the effective date oftermination stated in the notice, termi-nate all existing subcontracts and pur-chase orders and enter into no furthersubcontracts and purchase orders.

14.4.3 In case of such termination forthe Owner's convenience, theContractor shall be entitled to receivepayment for Work executed, and costsincurred by reason of such termination,along with reasonable overhead andprofit on the Work not executed.

All commentary contained herein is copyright © 1999 by The AmericanInstitute of Architects. All rights reserved. Printed in the United States ofAmerica. No part of this publication may be reproduced, stored in aretrieval system, or transmitted, in any form or by any means, electron-ic, mechanical, photocopying, recording, or otherwise, without the priorwritten permission of the AIA.

AIA Document A201 is copyright 1911, 1915, 1918, 1925, 1937, 1951,1958, 1961, 1963, 1966, 1967, 1970, 1976, 1987, © 1997 by TheAmerican Institute of Architects. Fifteenth edition. Reproduction of thematerial herein or substantial quotation of its provisions without writtenpermission of the AIA violates the copyright laws of the United Statesand will subject the violator to legal prosecution.

This publication should not be understood to offer legal or other profes-sional service. If legal advice or other expert assistance is required, theservices of a competent professional person should be sought.

The American Institute of Architects, 1735 New York Ave., N.W.,Washington, D.C. 20006.