Changes to the 2017 AIA A201 General Conditions: Section 1.1.8 on Initial Decision Maker

This is part 1 of a 15-part series on the changes to the AIA A201 General Conditions. This part deals with section 1.1.8.

In the 2017 changes, particularly section 1.1.8, there are some fairly significant changes to the Initial Decision Maker clause. The changes are as follows:

First, in my humble opinion, the whole Initial Decision Maker process is a bad idea. It usually ends up, by default, being the Architect under section 15.2.1 because people generally do not change the language and select a third-party. So, you basically have the fox guarding the chicken coop. The Architect, as the Initial Decision Maker, has a lot of control over the outcome of the dispute.

This scenario was attempted to be worked out by the language that “the Initial Decision Maker shall not show partiality to the Owner or Contractor…” but that does not fix the problem. How do you deal with a breach of this provision?

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Construction Contract Clauses, Part 7 – Indemnification and Insured Contract Coverage

Indemnification provisions frequently appear in construction and commercial contracts. They operate to shift risk from the party being provided indemnification to the party providing indemnification. The principle behind such risk shifting is to shift potential risks onto the party or parties that are best able to prevent, mitigate, or insure those risks. In that respect, indemnity provisions do not necessarily need to be a source of disagreement during contract negotiation.

Consider, for example, indemnification provisions that require one party to indemnify and defend other parties from the risks relating to personal injury and property damage. At first blush, the party who is to provide such indemnity may feel that they should not assume those risks. However, agreeing to a well-drafted provision requiring indemnification for personal injury or property damage can be a benefit to all of the parties—including the party providing the indemnity. Here is how that can occur.

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Construction Contract Clauses, Part 7 – Indemnification and Insured Contract Coverage

Indemnification provisions frequently appear in construction and commercial contracts. They operate to shift risk from the party being provided indemnification to the party providing indemnification. The principle behind such risk shifting is to shift potential risks onto the party or parties that are best able to prevent, mitigate, or insure those risks. In that respect, indemnity provisions do not necessarily need to be a source of disagreement during contract negotiation.

Consider, for example, indemnification provisions that require one party to indemnify and defend other parties from the risks relating to personal injury and property damage. At first blush, the party who is to provide such indemnity may feel that they should not assume those risks. However, agreeing to a well-drafted provision requiring indemnification for personal injury or property damage can be a benefit to all of the parties—including the party providing the indemnity.

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Changes to the 2017 AIA A201 General Conditions: Section 1.1.8 on Initial Decision Maker

First, in my humble opinion, the whole Initial Decision Maker process is a bad idea. It usually ends up, by default, being the Architect under section 15.2.1 because people generally do not change the language and select a third-party. That places the Architect, as the Initial Decision Maker, in the unenviable position of having to exercise control over the outcome of the dispute.

This scenario was attempted to be worked out by the language that “the Initial Decision Maker shall not show partiality to the Owner or Contractor…” but that does not fix the problem as it makes enforcement impracticable.

In addition, the second clause of the change provides that the Initial Decision Maker shall not be liable for the results or for the interpretations or decisions rendered in good faith. If the Architect assumes the role of IDM, there is no reason why the Architect should be shielded from responsibility in the exercise of that role. There is also a question as to whether the second clause is even enforceable. In many jurisdictions, you cannot release yourself from liability for negligence in advance. Nevertheless, this clause is probably going to be enforced.

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