In a number of previous articles I have noted that it is possible to use Rip and Tear (R&T) Clauses as a first line of defense against errors and omissions in design drawings.
Today I want to dive a little deeper into R&T and hopefully engage some of my fellow Architects and maybe a Lawyer or two in an open conversation about R&T.
Before I begin, I do want to be sure to state that you must verify EVERYTHING I am about to discuss with an attorney. I’m not offering legal advice here. This is an open discussion about a single stand-alone clause in a contract for a single stand-alone project. Both of which could have many other circumstances (and laws) that impact the use and enforceability of the clause.
What is R&T
Rip and Tear clauses are contract provisions that establish the Architect’s liability to pay for costs that the Owner may incur if the drawings contain errors and omissions that lead to expenses requiring the contractor to “rip out” any work previously installed.
What is covered in R&T
In construction, any clause imparting liability needs to avoid violation of the “Betterment Doctrine”. This means that there can be no award of damages that exceeds the benefit the Owner would have received had the work been properly performed.
Basically this means that if an Owner wants any feature in his building, he should pay for that feature and no error or omission by the Architect or even the Contractor entitles the Owner to have the other party pay for that feature.
An R&T clause covers ONLY the added labor and material incurred if the discovery of an error in the drawings requires the Contractor to rip out and reconstruct previously completed work.
Owner’s Design Contingency
The other legal concept that needs to be observed when developing an R&T clause is that the courts will not accept imparting a standard of perfection onto the Architect. In other words, your Architect cannot be expected to produce flawless drawings. To make your clause enforceable, you need to allow for a margin of error.
Typically this margin is something I negotiate with the Architect in advance of the work.
Setting a margin of error means establishing a design contingency. Its best to set the contingency as a percentage of the Contractor’s contract value.
This design contingency has to be differentiated from other contingencies the Owner or the Contractor may carry. It should be specifically earmarked to address R&T expenses. Once this contingency is used up, the Architect’s liability begins.
Does R&T Raise the Architect’s Liability or reduce the Owner’s rights?
The initial reaction most have when they see this type of clause is that it raises the Architect’s liability or that it limits the Owner’s rights. In my opinion, it does neither.
Assuming the conditions are perfectly clear and there are no other issues to consider, if the Architect’s drawings simply missed something which was caught after some portion of work was completed and a portion of the completed work needed to be redone, the Architect’s liability to the Owner would be to reimburse them for the additional labor and material.
To further preserve the Owner’s Rights I also add a line that states;
“Nothing contained herein shall be construed as a limitation on the Owner’s legal rights to arbitration, remuneration, or to seek relief for damages resulting from The Architect/Engineer’s negligence.”
I started this article by stating that you should seek legal advice before adopting any of this. I will end by reiterating that qualification and also citing that there are many other considerations that may impact the rights of the Owner and rights of the Architect.
My goal in discussing R&T is to create an open and transparent dialogue between parties to foster responsible and proactive remedies. I believe that Owner’s and Architect’s do not spend enough time openly discussing expectations. In my opinion a clause like this clarifies expectations and gives the parties a framework for equitably correcting issues without subjecting themselves to long arguments or costly courtroom battles.
Of course, if the facts are in question and the parties cannot agree, they can always take other action, but I would want well-established guidelines that allow for quick and speedy relief whenever possible.
Do you think R&T clauses are a good idea? Do you think R&T clauses are a bad idea? Have you used an R&T clause before? Tell me your stories.
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