Instructions: B161™–2022, Standard Form of Agreement Between Client and Consultant for design consulting services where the Project is located outside the United States

 

Synopsis.

AIA Document B161™–2022 is drafted for a U.S. architect (Consultant) who is hired to perform design services for a foreign-based Client and project where the Client retains a local architect in the foreign jurisdiction to prepare Further Design (Construction) Documents based on the Consultant’s Design Development Documents. B161 is not intended for U.S. architects who are licensed in the foreign jurisdiction or who have an office in the foreign jurisdiction. It is anticipated that B161 will be used with private foreign companies, as opposed to foreign governments. The document is intended to clarify the assumptions, roles, responsibilities, and obligations of the parties; to provide a clear, narrative description of services; and to facilitate, strengthen, and maintain the working and contractual relationships among parties. Unlike other AIA documents, no General Conditions are associated with B161. Also, some terms used commonly in domestic, standard form AIA agreements, such as program and construction documents, do not have the same meaning in B161 (however, their modified definition is provided in B161).

 

When undertaking design services for a foreign Client and negotiating the contract, it is important to consult with an attorney who is licensed to practice in the jurisdiction where the Project is located. An attorney based in the foreign jurisdiction can confirm the legality of design consulting services in the agreement and determine if they conflict with any local laws. Additionally, consultation with insurance and tax advisors who are knowledgeable about, among other things, professional liability insurance requirements and their availability, as well as tax requirements in the foreign jurisdiction, is crucial.

 

NOTE: The term Owner has been replaced with Client throughout B161 and these instructions to reflect standard international usage.

 

NOTE: The term Architect has been replaced with Consultant throughout the document and these instructions to recognize that the U.S. architect is not licensed to practice architecture in the foreign jurisdiction.

 

AIA Document B161–2022 assumes that:

1)         this agreement will be used by the Consultant for a project that is located outside of the United States;

2)         the Consultant is not licensed to practice architecture in the foreign country where the Project is located and must be referred to as a consultant rather than an architect;

3)         there is a direct relationship between the Client and Consultant;

4)         there is a Local Architect linked contractually to the Client; and

5)         terms in this agreement have the same meaning as standard American English.

 

For all document details, see the summary  »

 

Completing B161-2022.

Cover Page.

Date. The date represents the date the Agreement becomes effective. It should be the date of actual execution. Professional services should not be performed prior to the effective date of the Agreement.

 

Parties. Parties to this Agreement should be identified using the full legal name under which the 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, close 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.

 

In some countries, the Client is not necessarily the “Owner” of the property, as there may be laws in that foreign country regarding who may hold property. In such jurisdictions, the government may own the property and grant land use rights to the developer, who is the Client for the Project

 

Project. The proposed Project should be described in sufficient detail to identify (1) the official name or title of the facility, (2) the location of the site, if known, (3) the proposed building usage, and (4) the size, capacity, or scope of the Project, if known.

 

Article 1   General Provisions

  • 1.1.5 The Design Brief may also be known as Terms of Reference.

 

  • 1.1.18 Substantial Completion. Some countries may use the terms Substantial Performance or Practical Completion instead of Substantial Completion.

 

Article 2   Initial Information

  • 2.1 Initial Information is provided in Section 2.1. The parties should take care to be as explicit and detailed as possible with respect to the relevant Initial Information by completing each blank section following a prompting statement. If a statement is not applicable to the Project, the parties should insert a declaration to that effect in the blank following the statement. No spaces in Section 2.1 should be left blank.

 

  • 2.1.2 On projects where it is appropriate, include topographical descriptions and information about easements, rights of way, and zoning as part of the site description.

 

  • 2.1.4 The parties must set forth the Client’s anticipated dates for construction commencement and Substantial Completion as those dates are to be incorporated into the Consultant’s initial schedule for the Consultant’s services, and they determine at which point the Consultant will provide certain services as a Change in Services.

 

  • 2.1.9 There is no prohibition on naming the Consultant on attributions due to the Consultant not being licensed in the Client’s jurisdiction.

 

  • 2.1.10 The intent of this provision is for the international Client to contract with all consultants and contractors. The Client or Local Architect should hire all others who will provide services or labor on the Client’s project. For liability, tax, and other reasons, the Consultant should not hire any foreign consultants, engineers, contractors, or other foreign parties for the Project on behalf of the Client or the Client’s other consultants. Additionally, B161 contemplates that the Consultant will not retain subconsultants for its limited design role, which has been deleted from the 2002 version. If the Consultant retains subconsultants, B161 will need edited accordingly to address them.

 

In countries where the Consultant is not licensed to practice architecture, the Consultant cannot retain the Local Architect as a subconsultant, even upon the Client’s request. In some jurisdictions, the term Local Architect is replaced with the term Engineer. If the Consultant’s Project is in such a jurisdiction, this change in terminology should be made throughout the Agreement.

 

It is assumed that the Cost Consultant is independent of the Client and Consultant and is knowledgeable about construction costs in the location of the Project. The international Client may require a Quantity Surveyor in addition to, or in place of, the Cost Consultant. More information about a Quantity Surveyor is available in the B561-2022 Guide to International Practice and Contracting for U.S. Architects.

 

  • 2.2 Because the Consultant may not be familiar with local issues relating to the availability of labor or materials, the Consultant should not take responsibility for cost control issues.

 

Article 3   Consultant’s Responsibilities

  • 3.2 The standard of care varies by country, and some country’s law may impose strict liability on the Consultant that cannot be waived. The Consultant should verify whether this is the case, and if so, how its services will be impacted.

 

  • 3.5.2 Some countries may require that the Consultant obtain an insurance policy from a carrier who is licensed, or admitted, to do business in that country. In addition to PLI, and potentially a local insurance policy, the Consultant may consider purchasing other types of coverage for international liability, such as Kidnap and Ransom and Political Risk Insurance coverage.

 

Furthermore, the Consultant may be exposed to decennial liability in certain civil law jurisdictions – regardless of whether the defect is related to the Project’s design, construction, or both - for at least 10 years after final completion and approval by, or delivery to, the Client. The building owner then has up to three years after the discovery of the defect to file a claim, which means that a design firm can be sued up to 13 years after Project completion. Consultants who restrict their services to design only may be able to limit their liability to errors and omissions in the plans. To learn more about decennial liability, consult the B561-2022 Guide to International Practice and Contracting for U.S. Architects, as well as an attorney or insurer with expertise in international law or insurance.

 

Article 4   Scope of Consultant’s Services

B161-2002 contained an exhibit for each phase of the Consultant’s services.  It also offered an optional Responsibility Matrix in a separate exhibit to allocate responsibilities and define the schedule and deliverables for the Project.  B161-2022 moved each phase of the Consultant’s services from individual exhibits into the body of the Agreement, consistent with B101-2017 and all other AIA Owner-Architect Agreements.  Because the 2022 version clearly delineates the Consultant’s services in each phase of the Agreement, the Responsibility Matrix was eliminated.  Depending on project complexity, the parties may find it prudent to include a Responsibility Matrix to further detail responsibilities of the Client, Consultant, and Local Architect.

Responsibility Matrices are project specific and difficult to create in a standard form document to suit all project types, however, the Consultant may find sample matrices in the AIA Global Practice Primer helpful when creating one for their Project.

 

  • 4.1 If a box is not checked, the Consultant is not providing any of the services associated with that phase.

 

  • 4.1.3 Authorities having jurisdiction may be entities in addition to governmental authorities, such as permitting departments, fire marshal and other life-saving entities, and utilities.

 

  • 4.1.6 The Consultant should confirm with local legal counsel that attending meetings in the country where the project is located, alone or together with other activities to be undertaken in that country, is permissible and does not subject the Consultant to adverse legal or financial consequences.

 

  • 4.3.1 The Consultant should not advance to a subsequent phase without the Client’s written approval of the present design phase.

 

  • 4.4.1 The Consultant should not advance to a subsequent phase without the Client’s written approval of the present design phase.

 

  • 4.5.1 The Consultant should not advance to a subsequent phase without the Client’s written approval of the present design phase. Additionally, the Consultant’s role in reviewing the Local Architect’s Further Design Documents is akin to reviewing Shop Drawings for conformance with the Consultant’s design intent expressed in its Design Development Documents. Furthermore, the number of reviews that the Consultant and Client agree to in this section should also include the number of possible re-reviews and timelines for those reviews. For example, if reviews are included at 30%, 50%, and 90%, the Consultant may stipulate that there is only one re-review for each milestone to limit the number of total reviews. The Consultant may expound on this by specifying that it will be given X number of weeks for each review and reflect this in its schedule and any updates to the schedule.

 

  • 4.6 The Consultant should perform minimal procurement phase responsibilities and not take on responsibilities that should belong to the Local Consultant.

 

  • 4.7 The Consultant should perform minimal construction phase responsibilities and not take on responsibilities that should belong to the Local Consultant.

 

  • 4.7.3.2 The Consultant should review a limited number of submittals, as they pertain to the Consultant’s Design Development Documents, to avoid receiving all Project submittals or those outside of its scope. The description can be used to describe submittals for materials, systems, and components.

 

Article 5   Change in Services

The concept of Change in Services is not standard practice in every country. In many jurisdictions, it is customary for the Consultant’s fixed fee to include all changes in services.

 

Article 6   Client’s Responsibilities

The Local Architect may provide some of these services. If so, Articles 6 and 7 should be edited to accurately reflect default responsibilities of the Client’s that the Local Architect will handle.

 

Article 7   Services of the Local Architect

Article 7 defines the essential terms relative to the responsibilities of the Local Architect. The Consultant is entitled to assume that the Client has incorporated these terms into the Client’s Agreement with the Local Architect. This Article assures that the services of the Local Architect are compatible with the Consultant’s services. It is important that the Local Architect is fluent in American English to (1) translate local regulations and codes for the Consultant and (2) to translate for the Consultant when meetings are not conducted in American English.

 

  • 7.2 In some jurisdictions, the Client or local code may require the Contractor, rather than or in addition to the Local Architect, to design the Project’s usual and customary structural, mechanical, and electrical systems.

 

  • 7.13 The Consultant should verify that secure and compatible technology for telecommunication and data transmissions among the Project team are in place when in the foreign jurisdiction.

 

  • 7.15 Examples of other services that may be required of the Local Architect include assisting with local transportation, residency permits, administrative support, and logistical support.

 

Article 8   Cost of the Work

  • 8.6 If the estimate for the Cost of the Work exceeds the Client’s budget at the end of the Design Development Documents, the Client has two choices: 1) have the Local Architect incorporate design-to-budget revisions to the Design Development Documents to produce the Construction Documents or 2) have the Consultant modify its Design Development Documents as a Change in Services.

 

Article 9   Copyrights and Licenses

  • 9.1 The Berne Convention Treaty in most, but not all countries, governs international copyright law.

 

Article 10   Claims and Disputes

  • 10.2.1 B161 provides that a request for mediation may be filed concurrently with the filing of an arbitration request. Parties who choose to apply a set of mediation rules other than ICDR should verify whether those rules allow for concurrent filing of mediation and arbitration requests.

 

  • 10.2.2 Barring any restrictions by applicable foreign laws, parties can negotiate the location where mediation will be held. Under the ICDR Rules, the parties may mutually agree to conduct all or part of mediation, as well as other meetings associated with the mediation, via video, audio, or other electronic means. It is important for the Consultant to consult an attorney experienced in the laws of the Client’s country (or country of the Project, as applicable) regarding any local laws that may override this default. Unlike an arbitrator, a mediator is not empowered to decide the location for mediation.

 

  • 10.3 The Consultant should confirm with local legal counsel that the country where the Project is located is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention, to ensure an arbitral award against the Client can be enforced.

 

  • 10.3.1.1 The Consultant should verify whether the law of the jurisdiction where the Project is located overrides the statute of limitations in B161.

 

  • 10.3.2 Barring any restrictions by applicable foreign laws, parties can negotiate the location where arbitration will be held – including a virtual setting. Designating the seat of arbitration is important because that location is needed for the application of procedural law of the arbitration and will affect the location of mediation when the parties select the checkbox for “the place of the Project” or “other”. Under the ICDR Rules, emergency hearings can be held by telephone, video, written submissions, or other suitable means, as alternatives to in-person hearings. The Rules also allow video, audio, or other electronic means to be used for arbitration. The parties can agree to hold hearings anywhere regardless of the seat identified for arbitration. The New York Convention is relevant because courts of contracting states give effect to private agreements to arbitrate and recognize and enforce arbitration awards made in other contracting states. It is important for the Consultant to consult an attorney experienced in the laws of the Client’s country (or country of the Project, as applicable) regarding any local laws that may override this contractual default.

 

Article 11   Termination or Suspension

  • 11.5 The Consultant should be aware that if a foreign party is named to the OFAC List of Specially Designated Nationals and Blocked Persons (SDN List), the foreign party’s assets are frozen, potentially for years or decades. The terms of each sanction are different and may be amended occasionally, but in general, when the U.S. sanctions an individual, company, group, or country, their money cannot be transferred into the U.S. There is also no type of insurance to compensate the Consultant for outstanding payments from a sanctioned foreign Client. If a foreign financial institution is named to the SDN List, the Client can still send payment to the Consultant through another financial institution. Otherwise, the Consultant is left unpaid. When a sanction is lifted, the Consultant can seek to collect unpaid amounts from the foreign Client. This underscores the importance of the Consultant’s due diligence prior to entering into a contract with the foreign Client, monitoring the SDN List, and working with an attorney who is familiar with OFAC.

 

Article 12   Miscellaneous Provisions

  • 12.1 The Consultant should be aware that the default governing law of the Consultant’s principal place of business will often be negotiated to the location of the Client (or location of the Project), as many countries’ laws require that the law of the Client’s country (or law of the country where the Project is located) will apply. Consultation with legal counsel about the implications of this change is important.

 

  • 12.4 Under the FCPA, it is a federal criminal offense to directly or indirectly bribe foreign (non-U.S.) officials to obtain or retain business or direct business to a person. A U.S. entity doing business with a foreign country is automatically required to comply with the FCPA. Additional guidelines about the FCPA are available in the International Guide and through the Department of Justice. The parties must also comply with anti-corruption laws of the country where the Project is located.

 

U.S. antiboycott laws prohibit U.S. companies and their foreign subsidiaries from participating in or cooperating with the Arab boycott against Israel, as well as any other non-U.S. sanctioned boycotts. As with FCPA noncompliance, failure of a U.S. individual and/or entity to comply with U.S. antiboycott laws can result in civil financial fines, severe penalties, adverse tax consequences, and personal criminal liability. More information about these laws is available through the U.S. Department of State and IRS. The Department of Commerce enforces antiboycott laws and regulations. The Consultant should work with an attorney who specializes in FCPA and federal antiboycott laws.

 

  • 12.9 A time period is stated for the statute of limitations to bring certainty to the Agreement in the absence of applicable local law. The statute of limitations is the time limit in which a party can bring a claim against another for damages. If a party does not bring a claim within that time, the claim is barred forever and cannot be made in the future.

 

B161™-2002 stated that a claim for loss or damage could be made upon the Consultant within six years from the earlier date of final completion of the Consultant’s services on the Project or Substantial Completion of the Project, or such earlier date as determined by applicable law. The rule of six years seemingly derived from Australian and English law. Australian law prescribes that a statutory warranty covers purchasers and subsequent owners for six years from completion of the building for latent (not readily discernable at the time construction is completed) structural defects that become apparent during the last six months of the statutory warranty period. Similarly, in England, actions for breach of contract and tort, including negligence claims for latent defects, must be brought within six years from the date on which the breach of contract occurred, or the date the negligent act or omission occurred. As B161 is intended for Clients and Projects in global locations that may be outside of England and Australia, and, as parties to a contract can designate their own contractual period in which to initiate claims, subject to applicable law, the statute of limitations period in B161 has been reduced to two years for acceptance in most jurisdictions. If the parties modify the governing law in § 12.1 from the principal place of business of the Consultant to, for instance, the law of the jurisdiction of the Project, the Consultant should confirm with local legal counsel that this provision is enforceable, and if so, whether the duration increases. Additionally, the Consultant should confirm that there is no mandatory provision of local law that imposes a longer statute of limitations.

 

  • 12.10 The Consultant should not enter a limit that exceeds the amount of insurance coverage required of the Consultant under this Agreement. Some civil law jurisdictions regard the parties’ contract as the law, so terms of the agreement will be given full weight exclusive of any local governing law. If the parties agree pursuant to § 12.1 that the Agreement will be governed by the law of the location of the Project, the Consultant should confirm with local legal counsel that this provision is enforceable, and in particular, that there is no mandatory provision of local law that negates this contractual limitation on liability.

 

Article 13   Compensation

Payment is one of the most difficult issues in international work. The Consultant may consider requesting a retainer equivalent to the Consultant’s projected fees for the first three to four months of the contract until the first payment has been received and to provide protection for payment of the final invoice. The Consultant may also consider including language in the contract that the Consultant reserves the right to adjust its fees when new or amended laws in the Client’s country (or country where the Project is located) adversely affect the Consultant’s fees, such as new restrictions on the transfer of funds out of the country.

 

  • 13.5 The Consultant’s hourly billing rates include its salaries, benefits, overhead, and profit for designated personnel. When hourly billing rates are used, include the cumulative amount for salary, benefits, overhead, and profit to fix each rate using words and numerals in the following insert:

Compensation for services rendered by Principals and employees shall be based upon the hourly billing rates set forth below:

  1. Principals’ time at the fixed rate of ________ ($__) per hour. For the purposes of this Agreement, the Principals are: (List Principals, such as owners, partners, corporate officers, and participating associates.)

 

  1. Supervisory time at the fixed rate of ________ ($__) per hour. For the purposes of this Agreement, supervisory personnel include: (List managerial personnel by name or job title, such as general manager, department head or project manager.)

 

  1. Technical Level I time at the fixed rate of ________ ($__) per hour. For the purposes of this Agreement, Technical Level I personnel include: (List those personnel by name or job title who are highly skilled specialists, such as job captains, senior designers, senior drafters, senior planners, senior specifiers, or senior construction administrators.)

 

  1. Technical Level II time at the fixed rate of ________ ($__) per hour. For the purposes of this Agreement, Technical Level II personnel include: (List those personnel by name or job title who hold intermediate-level positions relative to Technical Level I, such as professionals awaiting licensure and managers of clerical staff.)

 

  1. Technical Level III and clerical personnel time at the fixed rate of ________ ($__) per hour. For the purposes of this Agreement, Technical Level III and clerical personnel include: (List those personnel by name or job title who occupy junior-level positions, such as word processors or office assistants.)

 

  1. Compensation for services rendered by Subconsultants shall be based on a multiple of ________ (__) times the amounts billed by Subconsultants. Compensation shall be a stipulated sum of ________ ($__).

 

  • 13.6 The Consultant should explain the concept of Reimbursable Expenses to the Client, as Reimbursable Expenses are not standard practice in many jurisdictions. Additionally, the markup on reimbursable expenses may be subject to U.S. (income) and foreign tax, however, reimbursable expenses by themselves are not subject to tax.

 

  • 13.6.1.9 It is crucial that the Consultant obtain the advice of a tax professional experienced in foreign tax filings. Some foreign jurisdictions classify the Consultant’s travel to the foreign jurisdiction for a project meeting as working in that foreign country. In certain cases, failing to pay taxes to the foreign jurisdiction may lead to the Consultant being detained in the foreign country and a prohibition on the Consultant’s future travel to that country. Additionally, some foreign jurisdictions only collect tax from the Consultant, while others collect tax from the Consultant and Client.

 

  • 13.8.1.1 Initial payments, sometimes referred to as Advance Payments, are often only made in exchange for a letter of credit, bank guaranty, or similar device.

 

  • 13.8.2 In certain countries, Clients won’t let the Consultant submit an invoice until they inform the Consultant that it is okay, that they have accepted the Consultant’s deliverables, and received the consent of other parties. It is likely that this section will be replaced by Client invoicing protocols, procedures, submissions, and approval forms.

 

  • 13.8.2.2 Many foreign clients are unwilling to make monthly payments and will only permit the Consultant to be paid at predetermined milestones, such as at the end of a phase (and sometimes at 50% of a phase). In such a case, the Consultant may choose to modify this section to include the fee due at each milestone.

 

  • 13.8.2.7 The Consultant should obtain legal and tax advice regarding the effect of foreign taxes and other monetary exchange and interest issues on its fees; the importation of its Instruments of Service into a foreign country; and the effect of overseas income on its local tax liability.

 

Executing the Agreement

The persons executing AIA Document B161-2022 should indicate the capacity in which they are acting (i.e., president, secretary, partner, etc.) and the authority under which they are executing the Agreement. Where appropriate, a copy of the resolution authorizing the individual to act on behalf of the firm or entity should be attached.

 

Some non-U.S. jurisdictions have rules that make the enforceability of an agreement questionable if it is signed by a person who does not have authority to bind the company in respect of which the signatory purports to act. The Consultant should confirm with local legal counsel how the Consultant can determine that the individual signing on behalf of the Client is an authorized signatory. Additionally, in some jurisdictions, an original, “wet ink” version of a contract is required for certain purposes. In those instances, the Consultant should obtain and retain a wet ink execution version of the Agreement.

 

Exhibit A   Projected Travel and Costs

A Consultant may bundle trips to a Client’s country. If the Client pays for travel, it is important to clarify what class of travel is permitted, as well as who is booking air tickets and hotels. In some countries, it is common for Clients to expect travel to occur on their national carrier. The Consultant should research this and exercise caution, as some national carriers should be avoided.

 

In addition to recording the Consultant’s travel to the Client’s country in the table, the Consultant may record the Client’s trips to the Consultant’s office to budget costs for the number of days that the Consultant commits its staff to hosting the Client.

 

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 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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