Guide to Using the RIBA Professional Services Contracts 2018 - Other - Page 39
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Guide to RIBA Professional Services Contracts 2018
appointed on a Design and Build contract, even if a traditional form of procurement
had been envisaged at the outset. However, it may have been decided that the
Architect/Consultant will not be novated so that the Architect/Consultant stays
with the Client to monitor the works, or the Architect/Consultant may not wish to
undertake the working drawings or work for the Contractor.
Within the assignment clauses for the Concise and Domestic PSC’s , clause 4.3
provides for the parties to novate the Contract by agreement. If this is agreed as the
way forward, the novation clauses in the Standard PSC are more comprehensive and
should be referred to should the parties wish to novate using the other PSC forms.
Where the parties embark on a project assuming a traditional form of procurement,
the novation clauses give the Client the flexibility to change to a Design and Build
or Management form of procurement should the circumstances change during the
progress of the works for cost, time, liability or other reason.
In such circumstances all of the roles and responsibilities, including pre-novation
liabilities, of the Architect/Consultant are transferred from the Client to the Design
and Build Contractor. The novation is therefore a tripartite agreement by which the
existing contract between the Client and the Architect/Consultant is discharged and
a new contract is made between the Architect/Consultant and the Contractor, on the
same terms as the first. Thus, when the Architect/Consultant is novated they must
be left in exactly the same position as they were before the novation took place, with
their rights and obligations under the original Contract unaffected by the novation.
Any Novation Agreements should be added to the PSC as a numbered appendix.
See 4.14 Supplementary Agreements.
Novation versus switch
When in discussions regarding the transfer of their contract to a Contractor the
Architect/Consultant should be aware of the difference with a switch instead of
being novated ab initio. Unlike novation, whereby the terms stay the same, when
there is a switch, the original agreement between the Client and the Architect/
Consultant is effectively terminated on the appointment of the Contractor. A new
agreement is then set up between the Contractor and the Architect/Consultant,
but the terms and conditions may not be the same as before, possibly to the
detriment of the Architect/Consultant.
This could be seen to provide better clarity of the contractual relationships but,
in reality, puts the Contractor at an advantage when negotiating terms. However,
unlike ab initio, the Architect/Consultant’s liability to the original Client for the
preswitch services remains with that Client which may create a greater risk of
conflict of interest.
As far as the Contractor is concerned, liability for work before the switch remains
with the Client, who would then have to seek redress from the Architect/
Consultant. That said, this complex position can be simplified if the Building
Contract specifically states that the Contractor has examined the design and
adopted it. Notwithstanding this, the Architect/Consultant generally has greater
protection by accepting novation ab initio.
For a novation to occur, all parties to the original contract must agree to it as well
as the third party, i.e. the Contractor. The third party must provide some form of
consideration (i.e. a price, such as payment of fees) for the Contract to be effective.
Execution as a deed would also be effective as an alternative.
The parties can novate the Contract to the Contractor by using a standard form or by
means of a legally prepared Novation Agreement set out on agreed terms and agreed
based on the template clauses in clause 4.7 (see box). The Architect/Consultant
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