Implication of collateral warranties on architects in terms of professionalism, legal and economy

Abstract

Collateral Warranties are contractual agreements between parties who otherwise might not be in a contractual arrangement. In the case of an Architect it is unlikely he will have a contractual relationship with purchaser, tenant and funder of the constructed building. Therefore the purpose of Collateral Warranty is to create contractual relationship between the Architect and these parties. Particular issue are raised in relation to clauses dealing with "reasonable skill and care". What does this phrase mean and how does a judge, decide whether this standard has been achieved? The objective of this research is to determine the implication of Collateral Warranty on Architects and look into the circumstances in which the Architect is either liable or not towards those defects in performing his duty. This research will be limited to cases in Malaysia, United Kingdom and United States of America, regarding detailed provision of variation clauses in relation to ‘collateral warranties’ and Architects in "exercise reasonable skill and care’ in the most commonly used standard forms of contracts, i.e. PAM 2006 Form, PWD 203A (Rev. 10/83), RIBA CE/99, SFA/99, JCT and provision under Common Law. Finding from this research, Architect can be pursued by parties other than his client in Collateral Warranty. At the same time, Architect will under no circumstances have a greater liability to the third party than he already owes to the client. The use of phrase such as ‘utmost skill and care’ and ‘highest degree of skill and care’ do not tend to add to the Architect’s obligation, as the benchmark by which his performance to be judge is the exercise of such reasonable skill and care as would be exercise by a reasonably competent member of his profession. When the Architect is asked to provide collateral warranty, he is entitled to additional fees calculated on a time basis. Architect is also not liable to gives warranty on "fitness for purpose" as his obligation is to provide adequate advice in his profession to ensure client’s interest is achieved.