Guide to Using the RIBA Professional Services Contracts 2018 - Other - Page 38
Contract terms
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assigning the benefit of the Contract without the written agreement of the other
although the other party cannot unreasonably delay or withhold that consent.
The Client’s consent is also required if the Architect/Consultant wishes to appointment
a Sub-consultant to perform any part of the Services, but consent is not required
if the Architect/Consultant wants to employ any agency or self-employed staff.
However, any such sub-contracting does not relieve the Architect/Consultant of the
responsibility for carrying out and completing the Services. Alternatively, if the Client
agrees to appoint another Consultant, as an ‘Other Client Appointment’, to perform
those Services, the Architect/Consultant will have to collaborate with the Consultant
but no longer has the responsibility and liability for that element of the Services.
Assignment and delegation
Contracting parties and practitioners often refer to the assignability of contracts. While
in some instances they are specifically addressing the assignment of a party’s rights
under the Contract, in many cases they use the term ‘assignment’ to refer to both the
assignment of rights to receive performance and the delegation of duties to perform.
Under common law, a contract clause prohibiting assignment also prohibits
delegation. Another common law rule requires that a party to a contract cannot
delegate performance that involves special skills or reputation although it is possible
to have a novation under such circumstances.
An Assignment under the RIBA PSCs involves a transfer by the first party of some, or
all, of its rights to receive performance under the Contract to another party. Following
the Assignment, the first party no longer receives any benefits of their previous rights,
which are all transferred to the other party.
Delegation involves the transfer by the delegating party of some, or all, of its
performance obligations, or conditions requiring performance, under the Contract
to another party. For the delegation to be effective, the new party must agree to
perform the delegated services. However, the delegating party remains liable for the
delegated performance, whether it has also assigned its contracts rights, unless the
non-delegating party has agreed to a novation.
Novation
Novation is a further way for someone to transfer their interest in a Contract to
someone else. Novation effectively means to replace or to substitute. Novation in
contract law is a mechanism whereby one party transfers all of their obligations
and benefits under a Contract to a third party. The original party to the Contract is
extinguished, and a new contract is created with the original contractual obligations
and benefits transferred to the third party. That third party effectively replaces the
original party as a party to the Contract.
Whilst the difference between Assignment and Novation is relatively small, it is an
essential one. Assigning when the Architect/Consultant should novate could leave
them in a position of being liable for their original Contract. Whilst both Assignment
and Novation transfer the benefits under a contract, only Novation transfers any
previous obligations from the previous contract to the new one.
There are two types of novation commonly used:
• ‘Ab initio’ which literally means ‘from the beginning’, so that all the services
carried out for the original Client before novation are deemed to have been
carried out for the new Client, e.g. the Design and Build contractor.
• ‘Switch’ where, after novation, the services carried out are for the new Client and
the responsibility for any services before novation remain with the original Client
thus not altering the contract history.
The RIBA Standard Professional Services Contract 2018 allows for the possibility
that the services of the Architect/Consultant could be novated to a Contractor
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