By Alisa Schneider, Esq., Manager and Counsel, AIA Contract Documents
July 1, 2022
As an owner, you may find that you need a contract for a construction project with limited scope and complexity, and you do not want to use a lengthy and complex contract. Both the A104- 2017 Standard Abbreviated Form of Agreement Between Owner and Contractor and the A105- 2017 Standard Short Form of Agreement Between Owner and Contractor include terms that consider the completion of a small project. This article highlights factors for you to consider when choosing between the A104-2017 and the A105-2017 for your project.
Importance of the Contract
Even if the construction project is small, a construction contract is still important. A contract for a small project will still provide a platform to clearly identify the parties’ responsibilities and manage the parties’ expectations which will facilitate a successful business relationship and project completion.
Considerations for the A104-2017 and the A105-2017
The A104-2017 and the A105-2017 both establish a stand-alone contractual relationship between the owner and the contractor. A stand-alone contract means the general conditions are included within the contract (e.g., the contract does not incorporate the general conditions by reference or as an attachment).
While both the A104-2017 and the A105-2017 include consideration for projects with limited scope and complexity, the A104-2017 can accommodate a slightly more complex project than the A105-2017. Below are some of the differences to consider when selecting the appropriate contract for your project.
1. Enumeration of the Contract Documents. Both contracts provide fill points to reference drawings, specifications, addenda, and other documents that will make up the definition of Contract Documents. However, the A104-2017 includes specific language that allows you to incorporate building information modeling, sustainability objectives, or other supplementary conditions into the contract. In addition, it includes provisions that will assist the parties in establishing the protocols for the development, use, transmission, and exchange of digital data.
2. Method of Compensation. Because the A104-2017 can incorporate a more complex scope, this contract includes compensation by stipulated sum or cost of the work with or without a guaranteed maximum price. The A105-2017, in contrast, includes compensation by stipulated sum only. This means, generally, the A105-2017 is best for owners with projects that have a clear scope, detailed design, and minimal risk of encountering unforeseen conditions.
3. Delegated Design. The A104-2017 allows the contractor to provide professional services, if required by the Contract Documents or the contractor’s own responsibilities, and the contract sets forth the way the delegated design will be managed by the parties. Delegated design is not included in the A105-2017.
4. Subcontractors. The A104-2017 includes standard language related to the contractor’s use of subcontractors to perform portions of the work. For example, a few requirements of the contractor include: (i) notifying the owner and architect of the proposed subcontractors or suppliers for each of the principal portions of work; and (ii) flowing down the contractor’s terms to the subcontractor. The A105-2017 does not include any standard provisions related to the contractor’s use of subcontractors in the performance of the work.
5. Hazardous Materials. The A104-2017 sets for the parties’ expectations in the event the contractor encounters hazardous waste materials or substances, including the owner’s indemnification obligations. The A105-2017 does not include any language, indemnity or otherwise, specifically related to hazardous waste.
6. Dispute Resolution. The A104-2017 dispute resolution provision includes the architect as the initial decision maker. Then, the next step is mediation. If mediation is unsuccessful, the A104-2017 provides a check-box selection of the method of dispute resolution (e.g., arbitration, litigation, or other resolution). The A105-2017 in contrast, omits the arbitration and other advanced dispute resolution provisions; however, the parties may include the desired dispute resolution procedure in Article 17 which provides a fill point for the parties to include any additional terms and conditions negotiated into the contract.
For more complex projects, parties should consider using one of the following AIA owner/contractor agreements: AIA Document A101-2017, A102- 2017 or A103- 2017 . These agreements are written for a stipulated sum, cost of the work with a guaranteed maximum price, and cost of the work without a guaranteed maximum price, respectively. Each of them incorporates by reference AIA Document A201- 2017 General Conditions of the Contract for Construction . For single family residential projects, parties should consider using the AIA Single Family Residential agreements: AIA Document A110-2021 , B110-2021 , A111– 2021, A112– 2021 or A113-2022 . These agreements are written to accommodate the construction and design of a single family project that ranges anywhere from complex design build, turnkey build or a remodel project. In any event, an owner should select the appropriate contract only after careful evaluation of project risk and complexity.
AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors. Any language quoting from AIA Contract Documents that have not yet been released is subject to change before final publication.