Architect signs C401 with his/her consultant is to reduce the risk or share the risk and reward with his/her consultant？
hey @hliu18, sorry for my late reply. Can you expand further on your question? I want to make sure I’m answering it correctly.
As a general rule, architects and consultants sign the C401 (or another contract) to manage risk and liability between the two parties. Consultant agreements will outline scope of services, payment terms, timeline of work, and other needs specific to the project. It’s less about sharing the risk/reward and more about creating a clear picture of what is expected of both parties to ensure the work is done properly and on time.
No worries, and thank you!
I think what i am confusing about is that the C401 is trying to protect the architect from being liable for consultant’s errors and omission by embedding the indemnification provisions but at the same time it creates a potential vicarious (contractual) liability to the architect for consultant’s mistakes if the consultant does not have an eligible professional liability insurance to cover his own mistakes.
One more thing worth mention, the C401 says that the consultant will get paid only after the architect gets paid, which seems to tie these two parties’ risk and reward together.
Open to other great thoughts and great minds:)
@heatherrivera; can you weigh in here?
I can try to help…
C401 states that the consultant is an independent contractor and that the architect is not responsible for the Consultant’s E&O’s (1.4). Additionally, Section 2.8 states that “the consultant shall maintain the following insurance for the duration of this agreement.” Though the language is confusion in 2.8.7, I believe what the contract is saying is that the Consultant can include the Architect and Owner under his umbrella policy. Nowhere does it state that the consultant cannot have insurance. In fact, 2.8.8 states that the consultant must show proof of insurance to the architect.
To your second point, yes, the consultant and architect can share risk and reward. If the architect doesn’t get paid, the consultant won’t. See sections 1.6 and 1.7. These will vary project to project. Most contracts I’ve seen, and by no means does this mean all contracts, have a set fee in these sections. For example, at completion, the architect will pay the consultant $5,000.
Hope that helps!