Do not define government rules and regulations as contract documents
from the desk of Nahom Gebre
Professional services agreements often incorporate terms from other documents by reference. In a recent client-drafted contract review we came across the following clause:
The Contract Documents consist of and include:
a) This ten (10) page Agreement.
b) All Exhibits referenced within or attached to this Agreement. c) All approved Change Orders.
d) All applicable governmental and agency ordinances, standards, policies, regulations, resolutions, conditional approvals, rules and permit conditions, whether or not specifically named as part of the Contract Documents.
The terms that are most often incorporated are the terms that matter the most.
Design professionals should be wary of any clause that seeks to make all government rules and regulations that are deemed applicable part of the contract documents. By definition, a professional services agreement is intended to describe the role and responsibilities of the parties to a contract; incorporating government rules and regulations into the contract documents provides no meaningful guide to either the client or the design professional and in our opinion such a clause should be deleted. It is difficult for the design professional to ascertain what the inclusion of the applicable government rules and regulations means. The prudent thing to do from a risk management perspective is to identify the specific government rules and regulations that pertain to the project, and then write the scope of services so that the impact of the applicable rules and regulations are accounted for. This approach reduces the contract terms between the client and the design professional to a limited universe of documents that explain the roles and responsibilities of the parties.