Webinar Highlights New AIA Subcontractor Document
The latest subcontractor document from the American Institute of
Architects (AIA), A401-2007, the "Standard Form of Agreement Between
Contractor and Subcontractor," stipulates that the subcontractor
must name the owner, architect, contractor and others as "additional
insureds" in its commercial general liability insurance policy.
This was one of the main points attorney James P. Laurie III focused
on during a webinar on December 11 about the latest changes.
The American Subcontractors Association (ASA) hosted Laurie's webinar,
"Straight Talk: Bidding and Negotiating the AIA A401-2007 Terms
According to Laurie, the new stipulation makes Article 13 on insurance
and bonds "one of the most talked about issues and the deal breaker
for AIA." According to ASA, which has chosen not to endorse the
updated document, the change will increase subcontractors' insurance
costs due to claims made by additional insureds, shift more risk
to contractors and subcontractors and result in more exposure to
claims and loss.
However, Laurie noted, "Just because it's in the standard form
doesn't mean you have to live with it."
Among other points, Laurie said that A401 relies heavily on additional
documentation, most notably, AIA A201-2007, "General Conditions
of the Contract for Construction." He pointed out that the first
page of the agreement says that contract documents have already
been made available to the subcontractor, meaning, "If you're not
careful, you're swearing on the first page that you got it." He
stressed that subcontractors should be aware of any additional documentation
or modifications to existing documentation and should ask to be
provided with all of the materials.
"When someone hands you the 401 and someone hands you a copy of
the 201 and someone hands you the prime contract, write to them
and say 'Are there any modifications? Are there any other documents?'"
Laurie said. "If you don't ask for it, you're not going to get it."
Laurie also told his audience that A401 clause 1.1 "is one of the
most important clauses in the contract," as it calls into the subcontract
the agreement between the contractor and subcontractor; the prime
contract, which includes the agreement between the owner and general
contractor and any documents noted there; any modifications issued
to the prime contract; documents listed in Article 16 of A401 (which
includes any additional documents added by the parties, as well
as A201-2007); and any modifications to the subcontract. Among the
additional documents that should be added, Laurie said, is the subcontractor's
scope of work.
Overall, Laurie said, "The new document here provides a lot of
protections for subcontractors that were not included in earlier
versions." However, he added, "They're written out in the 201 not
Other areas highlighted during the webinar include:
· According to Laurie, the gist of the "pass down" clause in article
2 is, "You're obligated to the contractor as the contractor is obligated
to the owner." He stressed that the terms incorporated must be reviewed
and understood. One in particular he pointed out was the contractor's
Notice of Claims deadline in A201 15.1.2, "21 days after occurrence,"
and subcontractor's deadline for making a claim being "not less
than two days before contractor's deadline for making a claim."
As Laurie pointed out, A401 doesn't mention claims or the deadline
for the contractors; for that, subcontractors must be familiar with
A201. He added, "Now deadlines are actually a reasonable period
of time to make a discovery and get something out."
· Laurie called Article 3.1 on the services provided by the contractor
"a significant improvement because it specifies what your expectations
will be." Clause 3.1.2 entitles subcontractors to certain expectations
about their working conditions, but doesn't spell out what those
might be. "In your scope of work you should refer back to 3.1.2-whatever
conditions that you need, you should go ahead and write those into
your scope of work letter and refer to that clause."
· Mediation, as discussed in articles 6, using American Arbitration
Association (AAA) is mandatory prior to any claim proceeding - unless
otherwise specified, Laurie explained. "AAA isn't necessary if you
don't want it to be that way," he said, however, "if you don't write
it in then you do have to do the mediation with AAA."
· Laurie noted that the clause on binding dispute resolution now
offers a choice of arbitration, litigation or other. It no box is
checked, litigation is the default. "I like other," Laurie said.
"I like other a lot." Other could be a hybrid of arbitration and
litigation or simply mean that it isn't necessary to use AAA for
· Laurie stressed the importance of verifying the subcontract sum
noted in article 10. "I am shocked every time I get something that
has an amount from an old draft," he said.
For more information on AIA A201, look for the February issue of
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