New ACE Forms of Agreement

The ACE has recently published revised versions of its agreements A(1) to C(2) as well as three new agreements – a sub-consultancy agreement, short form agreement and planning supervisor’s agreement.

The style and structure of the revised A(1) to C(2) agreements has been retained, the revisions being mainly confined to updating the agreements in order to take into account recent case law and new legislation. The principal areas where these agreements have been changed are as follows:

• The net contribution clause has been extended to include reference to joint insurance or co-insurance arrangements or any exclusions or limitations of liability which might mean that the other party from whom the consultant wishes to claim a contribution is not liable to the client – this follows the Co-operative Retail Services case (2002) where a consultant failed to recover a contribution from the main contractor who was a joint insured with the employer under the building contract for the damage incurred. As a joint insured the court decided the contractor was not liable to the employer for the damage and therefore no contribution was recoverable from the contractor.

• A new provision which seeks to prevent employees being sued directly by clients following the Merrett v Babb case (2002) – the relevant provision refers to an "Individual" and this definition might need to be reviewed if the appointment was used for the appointment of a lone consultant/sole trader.

• The rate of interest on late payments is specified as that provided by the Late Payment of Commercial Debts (Interest) Act 1998, currently 8% above the Bank of England rate – it should be noted that the Act does permit contracting parties to agree a lower rate of interest provided whatever is agreed satisfies the Act’s requirement that the remedy is "substantial".

• The Consultant may terminate the appointment when he considers circumstances have arisen which make it irresponsible for him to continue with carrying out any of the services.

• The Schedule of Services now follows the RIBA work stages.

The sub-consultancy agreement has been produced for use with agreements A(1) to B(2) and contains provisions seeking to make the sub-consultancy agreement back to back with the main appointment. As such, similar provisions to the principal changes in the A(1) to C(2) agreements identified above can be found in this sub-consultancy agreement.

The short form of agreement is intended for use with a concise brief for a limited activity such as preparing an investigative report or undertaking advisory work. The terms are an abbreviated version of the terms used in the A(1) to C(2) agreements although there are some differences for example, the agreement is silent on assignment, there are no requirements for collateral warranties, and the agreement is intended to be executed under hand.

The planning supervisor’s appointment has been developed with the Association of Planning Supervisors. The appointment layout follows the format and style found in the revised ACE A(1) to C(2) agreements and the conditions used in these ACE agreements are largely repeated in this agreement, for example the net contribution clause, limitation of liability provisions and payment conditions to the grant of a licence to intellectual property rights. Principal areas where a different approach has been taken are as follows:

• Neither party has any right to assign the appointment although there are provisions for novation of the appointment with the planning supervisor’s agreement.

• The intellectual property rights provided to the client include a right to grant sub-licences.

• There is no provision for collateral warranties.

For more information on this or other Herbert Smith publications, please email us.