Contract documents

April 18, 2023

Though many of AIA Contract Documents Owner-Contractor and Owner-Architect agreements are interrelated, it is a long-standing principle that these independent contracts do not create a contractual relationship between the contractor and architect. This is true for the A201®-2017, General Conditions of the Contract for Construction, where this principle is expressly stated. The A201 frequently refers to the architect on the project, but of course, the document is the general conditions between the owner and contractor. Though this document does not create a tri-party relationship, an Illinois court recently held that the architect is an intended third-party beneficiary of the contractor’s performance under the A201 and other AIA Contract Documents.[1]

The matter arose out of a construction project for a new building on a college campus. The college, as owner, entered into two AIA Contract Document agreements for the project – one with Legat Architects, as architect, and another with a construction management firm, as construction manager (CM), which incorporated the terms of the A201.

During construction on the building, a concrete slab allegedly settled in a manner that it was not designed to settle. Consequently, the slab was demolished and replaced, causing the college to incur extra costs. The college ultimately filed suit alleging a variety of claims seeking recovery of extra project costs from several parties who performed work on the project, including the architect and CM.[2]

At the trial court level, Legat argued that, pursuant to the terms of the CM agreement, the college’s claims against Legat were barred under the waiver of subrogation clause. The CM agreement contained the A201’s standard waiver of subrogation clause, which stated that the parties waived their rights against Legat for losses caused during construction that are covered by insurance. In response, the college argued that the CM agreement did not create a contractual relationship, or a cause of action in favor of, Legat. Additionally, the college argued that the CM’s obligations on the project are solely for the benefit of the college.[3]

The trial court found that the CM agreement clearly and expressly intended to benefit Legat. The trial court recognized that the CM agreement did not create a contractual relationship between the architect and the CM or Owner, but the A201 explicitly provided that the architect is entitled to performance and enforcement of obligations “intended to facilitate performance of the Architect’s duties.”[4] The court construed this as an explicit third-party beneficiary provision. The court held that Legat may properly invoke the CM agreement’s provisions as an affirmative defense to the college’s claims, and thereby dismissed such claims.[5]

On appeal, the Illinois Appellate Court faced two primary issues: “(1) whether Legat is a third-party beneficiary to the CM agreement which would allow it to invoke a waiver defense based on the CM agreement; and (2) whether, assuming that Legat is a third-party beneficiary to the CM agreement, whether section 11.3.7 bars the College’s claims against Legat in this case.”[6]

In upholding the trial court’s ruling that Legat is a third-party beneficiary to the CM agreement, the Court stated that the A201 identified Legat as an entity in which the college and CM waive all rights against. This, coupled with the fact that the architect is entitled to the performance of obligations that facilitate its performance, made clear that there was an unequivocal intended benefit to the architect with rights under the CM agreement. Because Legat was found to be a third-party beneficiary of the CM agreement, the Court upheld the lower court’s ruling that Legat may invoke these provisions as an affirmative defense to the college’s claims.[7]

With regards to the second issue on appeal, the Court relied on the waiver of subrogation clause and Illinois precedent in holding that the college waived its rights to bring claims against Legat for damages covered by insurance policies procured for the project.[8]

While architects are not a party to AIA Contract Documents Owner-Contractor agreements, this case demonstrates that architects may be intended third-party beneficiaries of the Owner-Contract agreement, especially if that agreement includes the A201. As an intended beneficiary, the architect may shield itself from liability and raise defenses that stem from the provisions of the A201 to claims that arise on projects.

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. 

[1] Bd. of Trustees of Oakton, Cmty. Coll. Dist. #535 v. Legat Architects, Inc., 2022 IL App (1st) 210155-U, 2022 WL 1201821.

[2] Id. at ¶¶4-5.

[3] Id. at ¶¶8-9.

[4] Id. at ¶14.

[5] Id. at ¶¶13-15.

[6] Id. at ¶12.

[7] Id. at ¶¶26-29.

[8] Id. ¶¶ 30-33.