Important Changes to the 2007 A401 - AIA Standard Form of Agreement Between A Contractor and Subcontractor

The American Institute of Architects (“AIA”) revised its standard form contract documents this year, including the standard form agreement between a contractor and subcontractor.

Published in October 2007, the changes to AIA A401-2007 contain large impacts to both general and subcontractors, some of which are summarized below:

Subcontract Documents

Under the new A401-2007 contract form, a contractor need only make available the Subcontract Documents to a subcontractor, where previously copies of these documents were furnished by the contractor. As such, a subcontractor must specifically request all Subcontract Documents from the contractor to ensure that they know the entire scope of work for a project.

Timing Change for a Contractor’s Remedies

If a subcontractor defaults or neglects to carry out its scope of work pursuant to the agreement and the contractor provides written notice as a result, A401-2007 expands the time a subcontractor has to correct such default or neglect. The subcontractor now has five working days, instead of three, to commence and continue correction of such default or neglect.

Written Requirement for Work Performed by a Sub-Subcontractor

A401-2007 requires a subcontractor to enter into written agreements with sub-subcontractors performing work on the agreement between the contractor and first tier subcontractor. This places a stricter burden on the subcontractor, as the previous version of A401 only required written agreements between a first and second tier subcontractor upon a request by the contractor.

Indemnity of the Contractor

Subcontractor must indemnify the contractor for the cost and expense a contractor incurs for 1) remediation of a material or substance brought to the site and negligently handled by the subcontractor; or 2) where the subcontractor fails to perform its obligation of taking reasonable precautions to prevent foreseeable bodily injury or death resulting from a hazardous material or substance.

Warranty

In the event that a warranty issue arises, the revised 2007 contract requires the subcontractor, at the request of the contractor and architect, to furnish satisfactory evidence as to the kind and quality of materials and equipment used. Therefore, subcontractors must keep organized records of the materials and equipment used after the completion of the project to ensure they can comply with this new provision.

Acceptance of Final Payment Constitute a Waiver of Claims

Any outstanding claims by a subcontractor are waived upon acceptance of final payment, unless the claims are made in writing and identified by the subcontractor as unsettled at the time of final application for payment. Subcontractors must be vigilant with ensuring proper documentation on all outstanding claims has been brought to the contractors attention prior to accepting final payment.

Again, these changes do not encompass all of the changes made to the A401, but are key updates that may affect your rights as a contractor or subcontractor.