Instructions: A121™–2018, Standard Form of Master Agreement Between Owner and Contractor where Work is provided under multiple Work Orders

A121–2018 Standard Form of Master Agreement Between Owner and Contractor where Work is provided under multiple Work Orders

Synopsis. 

AIA Document A121–2018 is a Master Agreement between the Owner and Contractor. It is intended for use when the Contractor’s scope of Work will subsequently be specified through the use of one or more Work Orders. A121-2018 provides only the common terms and conditions that will be applicable to each Work Order. Use of A121 plus a Work Order creates a contract that includes both the terms and the scope of Work. 

A121-2018 is coordinated for use with AIA Document A221™–2018, Work Order for use with Master Agreement Between Owner and Contractor. The Master Agreement plus Work Order contracting method allows multiple scopes of Work to be issued quickly without the necessity to renegotiate the terms and conditions of the Contract. 

It may be used on projects with a stipulated sum; cost of the work plus a fee, with or without a guaranteed maximum price; or other payment method determined by the parties. If using a cost-plus payment method, the parties will also use A121 Exhibit A, Determination of the Cost of the Work. For document details and a record of changes, see the summary »

 

Using A121–2018.

Cover Page

Date. The date represents the date the Master Agreement becomes effective. It may be the date an original oral agreement was reached, the date the Master Agreement was originally submitted to the Owner, the date authorizing action was taken or the date of actual execution.

Parties. Parties to the Master Agreement should be identified using the full address and legal name under which the Master Agreement is to be executed, including a designation of the legal status of both parties (sole proprietorship, partnership, joint venture, unincorporated association, limited partnership or corporation [general, limited liability, closed or professional], etc.). Where appropriate, a copy of the resolution authorizing the individual to act on behalf of the firm or entity should be attached. Other information may be added, such as telephone numbers and electronic addresses.

Article 1 – Master Agreement Term and Party Representatives

§ 1.4 Insert the name, title and other identifying information of the individual authorized to act on the Owner’s behalf with respect to this Master Agreement. This may be the same or a different individual than the representative authorized to act on the Owner’s behalf with respect to, and identified in a Work Order.

§ 1.5 Insert the name, title and other identifying information of the individual authorized to act on the Contractor’s behalf with respect to this Master Agreement. This may be the same or a different individual than the representative authorized to act on the Contractor’s behalf with respect to, and identified in a Work Order.

Article 3 – Payments

§ 3.1.5 Insert the time schedule for presenting Applications for Payment, and indicate due dates for making progress payments.

The last day upon which Work may be included in an Application should normally be no less than 14 days prior to the payment date, in consideration of the seven days required for the Architect’s evaluation of an Application and issuance of a Certificate for Payment and the time subsequently accorded the Owner to make payment. The Contractor may prefer a few additional days to prepare the Application.

Due dates for payment should be acceptable to both the Owner and Contractor. They should allow sufficient time for the Contractor to prepare an Application for Payment, for the Architect to certify payment, and for the Owner to make payment.

§ 3.1.6 Indicate the percent of retainage, if any, to be withheld when computing the amount of each progress payment.

The Owner frequently pays the Contractor the bulk of the earned sum when payments fall due, retaining a percentage to ensure faithful performance. These percentages may vary with circumstances and localities. The AIA endorses the practice of reducing retainage as rapidly as possible, consistent with the continued protection of all affected parties. See AIA Document A503™–2017/2019, Guide for Supplementary Conditions, for a complete discussion.

§ 3.1.7 Enter any agreed-upon interest rate for overdue payments.

§ 3.2.2 Insert the date by which Owner shall make final payment, if it differs from the one stated.

Article 4 – Dispute Resolution

Select from three choices of binding dispute resolution: (1) arbitration, (2) litigation or (3) another method that the parties must identify. Other types of dispute resolution include a dispute resolution board or a mini-trial. For additional information about other methods of dispute resolution, refer to The Construction Industry’s Guide to Dispute Avoidance and Resolution or visit adr.org for more information.

Article 5 – General Provisions

§ 5.9.1 Section 5.9.1 allows the Owner and Contractor to provide notice in electronic format. It is recommended that the parties use AIA Document E203™–2013, Building Information Modeling and Digital Data Exhibit, to establish the protocols for electronic communication. If E203–2013 is not used, insert the requirements for delivering notice in electronic form such as the name, title, and email address of the recipient and whether the system will be required to generate a read receipt (recommended). While notice in electronic form may be provided as set forth in this provision, other protocols for the use or transmission of digital data and BIM are established through the use of E203-2013, pursuant to Section 5.7.

Article 6 – Miscellaneous Provisions

§ 6.1 Identify the Owner’s representative and provide contact information.

§ 6.2 Identify the Contractor’s representative and provide contact information.

Article 15 – Insurance and Bonds

§ 15.1 Contractor’s Insurance

§ 15.1.1 Where the Contractor is required to maintain required insurance for a duration other than the period for correction of the Work, indicate the duration of required coverages in the fill point provided.

§ 15.1.2 Indicate the applicable coverage limits for the Contractor’s commercial general liability coverage.

§ 15.1.3 Indicate the applicable coverage limits for the Contractor’s automobile liability coverage.

§ 15.1.4 Some insurers have written excess policies which expressly state that they apply only in the event the underlying policies are exhausted through payments made by the underlying insurers (sometimes referred to as “actual exhaustion”). Policies that do not expressly require actual exhaustion are interpreted to permit exhaustion of the underlying policies through payments or contributions made by any combination of underlying insurers, insureds, or third parties (sometimes referred to as “functional exhaustion”.) Policies that only permit actual exhaustion are counterproductive to settlement whereas policies that permit functional exhaustion encourage settlement. The intent of this section is to facilitate settlement by requiring that any excess policies allow for functional exhaustion.

§ 15.1.6 Indicate the applicable coverage limits for the Contractor’s employer’s liability coverage.

§ 15.1.14 If the Contractor will be required to purchase and maintain other insurance, list the type of coverage and any applicable coverage limits.

§ 15.2 Owner’s Insurance

§ 15.2.3 If the Owner will be required to purchase and maintain other insurance, list the type of coverage and any applicable coverage limits.

Article 18 – Termination

§ 18.1.3 Insert the amount of any termination fee or the method for calculating the termination fee. For example, the Owner and Contractor may agree to progressively increase the termination fee up to fifty percent completion and then agree to progressively reduce the Contractor’s termination fee until final completion. Another example would be to begin with a large termination fee that is progressively reduced as the project progresses.

Exhibit A – Determination of the Cost of the Work

Exhibit A provides the definition of the Cost of the Work and a detailed listing of the costs to be reimbursed and those costs not to be reimbursed. Exhibit A is not applicable where the Contract Sum is a Stipulated Sum in accordance with the Work Order.

A.1.2.2.1 Identify the wages or salaries of supervisory and administrative personnel that will perform Work away from the site, the type of activity, and, if applicable, any agreed percentage of time to be devoted to the Work.

 

Executing the agreement.

The persons executing AIA Document A121–2018 should indicate the capacity in which they are acting (i.e., president, secretary, partner, etc.) and the authority under which they are executing the Master Agreement. Where appropriate, a copy of the resolution authorizing the individual to act on behalf of the firm or entity should be attached.

ISO® is a registered trademark, and Insurance Services Office™ and the titles of the ISO proprietary insurance forms identified herein are trademarks of Insurance Services Office, Inc. (“ISO”). Information which is copyrighted by and proprietary to Insurance Services Office, Inc. or its affiliates (“ISO Material”) is included and referenced in this publication. Use of the ISO Material is limited to ISO Participating Insurers and their Authorized Representatives and other licensees, in each case as licensed by ISO. Use by ISO Participating Insurers is limited to use in those jurisdictions for which the insurer has an appropriate participation with ISO. Use of the ISO Material by Authorized Representatives is limited to use solely on behalf of one or more ISO Participating Insurers, as licensed by ISO.

 

Important.

Modifications. Particularly with respect to professional or contractor licensing laws, building codes, taxes, monetary and interest charges, arbitration, indemnification, format and font size, AIA Contract Documents may require modification to comply with state or local laws. Users are encouraged to consult an attorney before completing or modifying a document.

Reproductions. This document is a copyrighted work and may not be reproduced or excerpted from without the express written permission of the AIA. There is no implied permission to reproduce this document, nor does membership in The American Institute of Architects confer any further rights to reproduce this document. For more information, see the document footer and the AIA Contract Documents® Terms of Service.

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