Episode 169 - Bespoke Appointment Contracts

This week we will be talking about Bespoke Appointment Contracts. This episode content meets PC2 - Clients, Users & Delivery of Services of the Part 3 Criteria.

Resources from today's episode:

Book: Law in Practice 3rd Edition by John Wevill

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Transcript

Episode 169:

Hello and Welcome to the Part3 with me podcast. 

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I am your host Maria Skoutari and this week we will be talking about Bespoke Appointment Contracts. Todays episode meets PC2 of the Part 3 Criteria.

Make sure to stay until the end for today’s scenario.

When we refer to Bespoke Appointment Contracts, what do we mean and why do clients use them:

A Bespoke Appointment Contract is in essence a tailor-made appointment contract put together by a clients legal advisor and comprises of clauses they deem as appropriate within it. These types of contracts tend to vary from the RIBA Professional Services Contracts. 

Typically, if a client has sufficient resources to do so, they tend to deviate from the standard professional services contracts provided by the RIBA and they propose to use a bespoke form of professional appointment. If the client is a regular user of architectural services, or a job is particularly complex or high value, the client may consider that the standard form available does not provide sufficient protection. They, therefore, tend to draft bespoke appointments to shift the balance of risk in favour of the client, impose additional duties or limit the architect’s authority and to address project specific concerns. As such it is for the architect and their legal advisor to assess the relative strength of the bargaining positions of the architect and the client in each case and seek for clarification and negotiation. 

So how do negotiations commence:

Firstly, the client’s solicitor will send out an initial draft tailored to the nature of the project. There are then three ways the architect should indicate proposes amendments and variations:

• Firstly, through manual handwritten amendments of the appointment - this method should be avoided as it may result in confusions over someone's handwriting.
• The second is using electronic mark-up, tracking the changes proposed by the parties at each stage in the negotiations.
• And the third is using an electronic schedule of comments in the format of ‘clause number - comment’. This tends to be the preferred and clearest way to record proposed amendments and track the negotiation.

Once the appointment has been finalised, the architect should ask to review the final draft in both clean and track changes before the document is sent out for signing, known as execution. 

Now, what happens if a client says they will accept no amendments to be made to the contract. In such instances, the architect may have particular concerns which are potential deal-breakers making the project no longer commercially viable for them or the proposed clauses may compromise their PII policy. The architect, however, should still raise these points with the client even if they state they will not accept amendments. The PI insurer may be willing to agree a specific one-off endorsement to the policy if the client is unwilling to compromise on a particular provision that may create a coverage issue. If everything else is favourable – the architect’s proposed design, their approach, the fee, the personalities – then a client will generally be open to a compromise on particular terms of the appointment. 

Now lets look at some typical terms and pitfalls found in bespoke appointments:

The main issues to watch out for includes:

• Unfamiliar Clauses: Bespoke contracts may contain unfamiliar legal language, hidden traps, or obligations that go beyond what’s reasonable or insurable.
• Imbalanced Risk: They may shift more risk onto the architect, for example by requiring fitness-for-purpose obligations, unlimited liability, or broad indemnities.
• Broad Indemnities: Requiring architects to indemnify the client for all losses, especially those not caused by negligence.
• Ambiguity: Poorly drafted bespoke clauses can be unclear, leading to disputes about what was intended.
• Conflicting Terms: There may be inconsistencies with other documents, like the building contract or collateral warranties, leading to confusion about whose terms take precedence.
• Intellectual Property Rights: The architect should ensure they retain their copyright unless adequately compensated for transferring it.

So to expand on some of these pitfalls, as mentioned, bespoke appointments tend to have a clause setting out the meaning of certain terms which appear throughout the appointment. A client may wish these meanings to be wider or narrower than the architect had anticipated. For the architect to understand how the definition may work to their disadvantage, they must cross-refer to the other parts of the appointment where the defined terms appear.

For example, there may be a clause for additional services stating: ‘… any substantial additional services which are not foreseeable by the Architect at the date of this Agreement, provided that design changes made in discussion with the Client and the preparation of alternatives before such design is finally agreed by the Client shall not constitute Additional Services.’

The intention of this wording is to restrict the architects ability to claim additional fees, even though they have a legitimate claim because they have carried out additional work over and above their basic services. There is no reason for an architect to accept such a restricted definition, this does not represent the market norm. The use of the wording ‘not foreseeable’ is harsh, because it is not subject to a standard of reasonableness. The client will argue that the architect should have foreseen that the additional services provided were going to be required and therefore the client should not pay for them. A similar effect is created by wording requiring the architect to provide the basic services and in addition do all things that ‘may be reasonably implied by them or are reasonably incidental to them’. But the architect needs to know with certainty what their basic services are and, from that, what will be additional; it is impossible to provide an accurate fee estimate without this information, something which is not helpful to the client or the architect.

The wording relating to design changes is indicative of a growing trend for clients to seek redesign for free as part of a ‘value engineering’ exercise or series of such exercises on a project. This is a misuse of the term value engineering, which when used correctly is about innovation through design to reduce cost. The risk being considered in this section is where the client seeks to oblige the architect to redesign down to cost. This could involve significant redesign by the architect, but the likelihood is that the need for designing down will not be, or not exclusively, the fault of the architect. It is usually for the quantity surveyor to keep track of likely expenditure. If the quantity surveyor only realises late on in the design process that a project is over budget, and that cost savings can only be made if the design is changed, the amount of work thrown away and work which must be redone can be huge. It is unreasonable to expect the architect to bear their own costs of the redesign in these circumstances, and such work should be treated as an additional service. Ideally the architect’s right to additional fees for such work should be expressly stated in the appointment. Ideally the architect should also be allowed some input into agreeing cost changes, and should ensure that the quantity surveyor’s appointment requires the quantity surveyor to seek the architect’s input before changes are made.

Another term which tends to be added or amended within such appointments is relating to Duty of Care. Knowledgeable commercial clients will usually expect an enhanced duty of care, over and above the standard of the ordinary skilled professional that is implied by law. 

The clause tends to read: ‘The Architect warrants that in respect of the Services they have and will continue to exercise all the reasonable skill, care and diligence to be expected of a properly qualified professional architect holding itself out as competent and experienced to perform such Services having due regard to the size, scope, nature, complexity and value of the Project.’ 

It can be hard to argue against this enhanced duty – it is effectively the market norm in a bespoke appointment and it is easy to see why a client who has selected an architect on the basis of their reputation and past experience expects to be able to rely on the architect achieving a special, subjective level of skill, not merely the ordinary standard of skill that the client could expect to get from any other architect. If the architect in question does actually possess the enhanced degree of skill and care, the practical consequences of accepting the enhanced duty may be limited. Even so, no architect should feel compelled to agree the enhanced standard without exploring whether the client will accept instead the standard of the ordinary skilled professional. As a compromise, an architect could add wording to the effect that: 

‘Notwithstanding any other provision of the Appointment, the Architect shall not be construed as owing any greater duty to the Client than to exercise the level of reasonable skill, care and diligence required by this clause.’

Incorporating this wording should be enough to cut across any more onerous standards of care or obligations that may otherwise be expressed in or implied by the appointment. Many PII policies are based on the ordinary standard of care, so agreeing the enhanced standard in an appointment could potentially be a reason for the insurer under such a policy to deny cover.

Other terms commonly found in bespoke appointments is ones relating to Collateral Warranties and Third Party Rights.

Such a clause tends to state: ‘The Architect shall, within 10 days of each request made by the Client, execute and deliver to the Client a deed or deeds of collateral warranty in the form set out in Appendix X, or will agree that the schedule of third party rights set out in Appendix Y shall apply, in favour of:

1. any funder providing finance in relation to the whole or any part of the Project;
2.  any Purchaser or Tenant taking an interest in the whole or any part of the Project; 
3. (iii) any Group Company or Affiliate of the Client; and
4. (iv) any Freeholder.’

The main point for the architect under this clause is to consider whether the job is one which warrants an obligation to provide contractual rights to third parties at all. If there is no limit on the overall number of collateral warranties that may be required this obligation can soon become very onerous, not just in terms of the extension of contractual liability to many parties over and above the architect’s immediate client, but also because of the amount of management time required to deal with them. There is also a temptation for clients to propose particular amendments to suit individual beneficiaries if the enabling clause allows for reasonable amendments to be proposed; most architects will be willing to consider changes. The time outlay and potential costs, however, of taking legal advice can significantly mount up over the course of 10 or 20 individual collateral warranties. It is most sensible to seek certain limitations on the overall obligation to provide collateral warranties, although this will depend on the nature of the project.

If the architect has a strong bargaining position, they may argue for the inclusion of an obligation to provide collateral warranties in response to a ‘reasonable’ request; the implication of this wording is that some requests may be unreasonable. A client will find this hard to accept, but this wording would protect the architect from the possibility of providing a collateral warranty to, for example, a beneficiary with a track record of making nuisance claims. As an alternative to address this issue, the architect may propose a specific exclusion of the obligation to provide collateral warranties if the parties are in dispute over fees, or a right for the architect to reasonably object to providing a collateral warranty in particular circumstances. 

The architect may also be obliged under the enabling clause to procure collateral warranties from some or all of their sub-consultants. This should always be subject to the architect’s ‘reasonable endeavours’. The client, under such circumstances, will argue that procuring such collateral warranties is within the architect’s control and will say that if the architect had not chosen to engage sub-consultants, the additional collateral warranties would not be required. However, the architect can make the point that, even if there is a strict obligation to provide collateral warranties in a sub-consultant’s appointment, this is still not a guarantee that the collateral warranty will be provided – the sub-consultant may breach their obligation.

Another key term commonly found within bespoke appointments is relating to indemnities, which might state:

‘The architect shall be liable for and shall indemnify the Client against any and all claims, actions, liabilities, losses, damages and expenses (including legal expenses) incurred by the Client which arise out of or in connection with, directly or indirectly, the Architect’s performance under this Agreement.’

This type of indemnity clause should never be accepted as PI policy tends to not cover for claims based on an indemnity. As the client does not have to prove that the architect has acted negligently in order to successfully claim under an indemnity. An example could be, the architect, exercised reasonable skill and care, and properly refused to grant an extension of time. If the contractor goes to adjudication claiming an extension of time and prolongation costs, and the adjudicator takes a different view from the architect and makes an award in favour of the contractor, the client is entitled to sue the architect under the indemnity to recover all their resulting losses and expenses, even though the architect’s original decision was not negligent.

Additionally, the limitation period for an indemnity starts to run only when the client suffers a loss, which could be years after the contractual limitation period expired. To mitigate indemnity clauses, the architect can try ways to limit their scope if the client does not accept in removing them. An architect could seek general wording to the effect that they shall owe no greater duty than to exercise reasonable skill, care and diligence. This would ordinarily cut across any indemnity provision.

Another important matter to be addressed within appointment contracts is Copyright and who owns it. By law the copyright in any designs, through the drawings and the finished building representing the designs, is owned by the architect, and the architect is generally free to recycle their work on other projects. The client will usually be granted a license to use any copyrighted material for the purposes of the respective project. This licence may be granted expressly under the terms of the architect’s appointment, or implied by law. The architect should include a provision linking the copyright licence to the payment of their fees. Commercial clients in particular are often unwilling to agree to this, but if there is any question about the strength of the client’s financial covenant, the architect has a stronger position from which to argue this point. The use of wording ‘grants with full title guarantee’, ‘‘unconditional, royalty-free, irrevocable’ licence should be removed and avoided, and the architect should generally not accept an obligation to assign the ownership of their copyright material generated in carrying out their services in relation to the project. 

So these are just a handful of terms architects need to be wary of when reviewing a bespoke appointment. Some key tasks they should always ensure they carry out when faced with a bespoke appointments is not to assume that just because a clause looks familiar, it has the same meaning as in a standard form. Every word matters and special attention must be given to:

• The Scope of Services: Is it clear what you’re being asked to do? Are there any hidden obligations?
• Standard of Care: Are you being asked to guarantee a result (fitness for purpose) rather than exercise reasonable skill and care? The latter is the professional norm and insurable; the former is not.
• Liability and Indemnity: Are there caps on your liability? Are you being asked to indemnify the client for all losses, even those outside your control?
• Insurance Requirements: Do the insurance provisions match what your policy covers? Never agree to obligations your insurer won’t support.
• Payment Terms: Are they clear, fair, and in compliance with the Construction Acts?
• Termination Provisions: Can the client terminate at will? What happens to your fees if they do?
• Dispute Resolution: Are the mechanisms for resolving disputes fair and practical? 

Make sure to negotiate and don’t feel pressured to accept every term as drafted. Propose amendments that restore a fair balance of risk and responsibility. Use standard forms as a benchmark for what’s reasonable. And keep a clear record of negotiations, agreed changes, and the final version of the appointment. This is vital if a dispute arises later. Ensure all documents are signed and dated, and that you have copies of all project correspondence.

To sum up what I discussed today:

• Unlike standard RIBA forms, bespoke appointment contracts are tailored by clients—often to shift risk in their favour, add duties, or address project-specific concerns. Architects and their advisors must carefully assess the balance of bargaining power and negotiate terms that are fair and commercially viable.
• Effective negotiation is therefore vital and involves clear, trackable methods for proposing amendments—preferably using electronic schedules of comments rather than handwritten changes. Architects should always review the final draft in both clean and tracked formats before signing.
• Bespoke contracts often introduce unfamiliar legal language, broad indemnities, ambiguous terms, or obligations that exceed what’s reasonable or insurable. Architects must scrutinise definitions, risk allocation, and any clauses that could restrict their right to additional fees or impose unlimited liability.
• Key areas to review include the scope of services, standard of care, liability and indemnity provisions, insurance requirements, payment terms, termination rights, and dispute resolution mechanisms. Never assume familiar wording means the same as in standard forms—every word matters.
• Architects should not feel pressured to accept every client-drafted term. Propose amendments to restore a fair risk balance, use standard forms as a benchmark, and maintain clear records of negotiations and final agreements. Proper documentation is vital for protecting both parties if disputes arise later.