ARE Daily | PcM #18 — Liability, Negligence & Defenses

Quick Recall (from #17 — Legal Issues: Agency & Duties)

An architect observes a structurally questionable concrete forming method during a site visit and says nothing. What implied duty may have been breached?

The implied duty to give contractors relevant information that affects project progress, including observed errors or problems. Silence isn't neutrality — if an architect observes something that could affect the work and fails to communicate it, that inaction can constitute a breach of implied duty.

Today's Content

Liability and negligence are the legal concepts that determine when an architect is financially responsible for something that went wrong. The exam tests the elements of negligence, the defenses available, and the time limits within which claims can be brought.

Liability is the legal responsibility for injury to another person or damage to property. Architects face liability through their actions, their inactions, and simply by being named as a responsible party in claims brought by others. The most common path to liability is negligence — the failure to use due care to avoid harm.

For an architect to be found negligent, three conditions must all be met:

1. A legal duty must exist between the parties.
2. The architect must have breached that duty.
3. The breach must have been the proximate cause of the damage or injury suffered.

All three are required. If a duty exists and was breached, but the breach didn't cause the damage, there's no negligence. The standard applied is the standard of care — what a reasonably prudent architect would have done under the same circumstances.

Three common defenses to negligence claims:

Betterment applies to claims of omission. If an architect's error requires a correction that also upgrades the project beyond what was originally specified, the owner can't claim the full cost of correction from the architect — only the additional cost above what the originally specified work would have cost. The owner was going to pay for the baseline work anyway.

Statute of limitations sets a time limit within which a claim must be filed. After the deadline, the claim is permanently barred. Limits vary by state, generally running three to ten years for construction claims against architects. The clock typically starts at substantial completion. A breach of contract claim may have a different time limit than a negligence claim, even in the same state.

Statute of repose is similar but works differently. It also sets an absolute cutoff, but the clock may start from a different trigger point — often discovery of the problem — and there is typically a second outer limit from substantial completion. For example: three years from discovery, with an absolute cutoff of six years from substantial completion. If a problem is discovered five years after substantial completion, the client has only one year to file. The statute of repose is used in some states, not all.

Privity and indemnification: Architects are generally protected from claims by parties with whom they have no direct contractual relationship (privity). The General Conditions (AIA Document A201) include an indemnification clause that holds owners and architects harmless from damages caused by contractors or others outside the contractual chain. However, courts don't always enforce indemnification clauses — particularly if the architect's own instructions or failures contributed to the damage.

Today's Questions

1. What are the three conditions that must all be present for an architect to be found negligent?
2. An architect specifies painted drywall. During construction, they mistakenly approve wood paneling instead. A change order is issued. The client demands the architect pay the full cost. What defense applies, and how does it work?
3. A construction defect is discovered 4 years after substantial completion. The state has a 3-year statute of limitations starting at substantial completion. Can the client still file a claim?
4. What is privity, and how does it theoretically protect architects from third-party claims?

Next up: Risk Management & Third-Party Claims

Answers from #17 — Legal Issues: Agency & Duties

1. Agent, principal, third party in construction? → Architect = agent, Owner = principal, Contractor = third party. The architect acts on behalf of the owner in dealings with the contractor.
2. Why must change orders be signed by both architect and owner? → Because the architect acts as the owner's agent — instructions to the contractor should reflect the owner's actual wishes, not just the architect's interpretation. Dual signatures confirm the owner is aware of and approves the change, limiting disputes and clarifying authority.
3. Three ways duties are established for architects? → (1) By contract (written or oral agreements), (2) by legislative enactment (building codes, licensing laws), and (3) by conduct (implied duties arising from how parties have behaved, even without explicit contractual language).
4. Architect says nothing about questionable forming method — what duty breached? → The implied duty to give contractors relevant information that affects project progress, including observed problems or errors. Inaction when a problem is observed is itself a potential breach.

Additional Quick Recalls

From #03 — Standard of Care An architect guarantees in their contract that the building will be watertight. How does this affect their standard of care and insurability?

It raises the standard of care above the default — from "reasonably prudent" to the specific guarantee made. This elevated standard may be impossible to meet and can make the architect's work uninsurable, since professional liability insurance covers negligence (failure to meet the standard of care), not contractual guarantees of outcome.

From #08 — HR: Hiring Under employment at will, can an employer terminate an employee for reporting a safety violation to OSHA?

No. Employees are protected from retaliation for reporting health or safety violations — this is whistleblower protection. At-will employment does not override it. Terminating someone for an OSHA report exposes the firm to significant legal liability.

From #16 — Accounts Receivable What is a retainer, and when should it be requested?

A retainer is an upfront payment — typically 10–20% of the fee — requested before work begins. It covers the firm's initial investment of time and resources before normal billing cycles produce payment. If a client objects to a reasonable retainer, that's a signal worth investigating before proceeding.