The Difference Between Design Professionals and Contractors
From the desk of Judy Mendoza
Many clients of design professionals do not understand the difference between design professionals and contractors. This is particularly true when a design professional is being retained as a subconsultant to a design-builder, but it can occur with all types of clients on a myriad of projects.
When I review a contract in which a design professional is referred to as “Contractor” or “Subcontractor,” a red flag goes up. While there is nothing inherently wrong with a design professional being referred to as a "Contractor” or “Subcontractor,” the use of these terms may be an indication that the contract being offered is one that is more appropriate for hiring someone to build a portion of the project, rather than for retaining a design professional.
Contractors have very different duties and responsibilities from design professionals. A design professional’s duty is to "exercise the degree of learning and skill ordinarily possessed by a reputable design professional in the same or similar locality and under similar circumstances." The legal system recognizes that a design professional cannot guarantee a perfect result, and professional liability insurance only provides coverage for damage caused by the design professional’s breach of a standard of reasonable care. Professional liability insurance policies exclude coverage for claims arising out of express warranties or guarantees. Coverage is for professional services provided, and not for assumed contractual obligations. Coverage does not "stretch" to cover a warranty of services or a contractual promise beyond meeting the standard of care.
Contracts that are traditionally used when hiring a contractor contain many terms that are inappropriate when securing services from a design professional. Examples include such words as work, warrant, guarantee, and supervise. Such contracts may include the phrase “responsibility for construction means and methods and job site safety,” or “requirements regarding liquidated damages and bonding.” Indemnity provisions in these types of contracts are typically not limited to negligence.
Here are some examples of problems found in a recently reviewed “contractor agreement” offered to a civil engineer to update a Master Utilities Record Plan:
- The engineer was asked to secure a performance bond.
- The Agreement contained a “time is of the essence” provision as well as a “liquidated damages” provision.
- The indemnification was not limited to the extent damages were caused by the “Contractor’s” negligent acts, errors and omissions, and it contained an uninsurable duty to defend the client.
- The engineer was required to provide an uninsurable one-year warranty that the “workmanship and materials be proper and sufficient for the purpose contemplated,” “be free from defects,” and that the “work shall conform to, perform as set forth in, and meet all requirements of this Agreement.”
- No professional standard of care language was included and there was no requirement to carry professional liability insurance.
If you are presented with a similar type of contract you should try to persuade your client that it is the best interest of both you and the client to use a professional services agreement that is better suited to procuring design services.