OBLIGATIONS and

CONTRACTS

AR 3241 –
ADMINISTERING THE REGULAR DESIGN
SERVICES OF THE ARCHITECT
  An OBLIGATION is a juridical necessity to GIVE, to DO or
NOT TO DO. (Art. 1156 of the NEW CIVIL CODE OF THE
PHILS)

 Is a legal BOND by which one or more parties

OBLIGATIONS
(OBLIGANTS) are bound to act or refrain from acting.

 Imposes a DUTY to PERFORM and simultaneously creates

a corresponding right to demand performance by the
oblige to whom performance is to be tendered.
  ACTIVE SUBJECT – is the person who has the right or power to
demand the performance or payment of the obligation. Called the
OBLIGEE or CREDITOR
 PASSIVE SUBJECT – is the entity bound to PERFORM or PAY.
He is the one against whom the obligation can be demanded.
4 ESSENTIAL Called the OBLIGOR or the DEBTOR

ELEMENTS  PRESTATION – is the object of the contract. It is the CONDUCT

required to be observed by the DEBTOR or OBLIGOR, obligation to
of an give, to do or not to do.
OBLIGATION  VINCULUM JURIS – known as the JURIDICAL OR LEGAL TIE,
others call it the EFFICIENT CAUSE. It is that which binds or
connects the parties to the OBLIGATION. In other words, it is the
LEGAL RELATION between the DEBTOR and the CREDITOR
(OBLIGOR or OBLIGEE)
 If you have an obligation to do something, it is
your duty to do that thing. It is between two
parties, or two individuals.

 Another word for OBLIGATION in legal term is

DUTY. It is binding, it is specific and legally
binded by a CONTRACT.
  CONTRACT – is a meeting of minds between
two persons whereby one binds himself with
respect to the other, to give something or to
render some SERVICE. For it to be valid, 3
elements must be present:
CONTRACTS
 1. CONSENT
 2. OBJECT
 3. CAUSE
  The element of CONSENT is satisfied once the parties
agree on the terms of the CONTRACT.
 It is a situation where one party makes an offer and the
other party accepts it.
 If a party responds to an offer by proposing some
CONSENT modifications to the offer, this is called a “ COUNTER-
OFFER” and there is still no legal contract between both
parties.
 The responsibility to accept, decline, or propose another
counter- offer shifts to the original offeror.
  All things which are outside the commerce of
men maybe the OBJECT of the contract.

OBJECT  All services which are not contrary to LAW,

MORALS, GOOD CUSTOMS, PUBLIC ORDER,
or PUBLIC POLICY maybe the OBJECT of a
CONTRACT
  Also called CONSIDERATION – is the essential reason which
moves the parties to enter into a contract.
 Called the “WHY of the CONTRACT” which dictates the
nature of the contract
- ONEROUS CONTRACTS – involves the promise of a
service or thing by a party which need not be monetary but
CAUSE could entail other things or undertakings of value.
- REMUNERATORY CONTRACTS – the cause is a
service or benefit which does not arise out of any legal
obligation.
- GRATUITOUS CONTRACTS – the cause is the
liberality or generosity of a party – involves contracts of
donation
  1. Acts and contracts which have for their object the
creation, transmission, modification or extinguishment
of real rights over immovable property
 2. Cession, repudiation or renunciation of hereditary
CONTRACTS rights or those conjugal partnership of gains
that need to  3. the power to administer property or any other power
be in writing which has for its object an act appearing or which
should appear in a public document, or should
prejudice a third person
 4. The cession of actions or rights proceeding from an
act appearing in a public document.
  When extensive consultations with CLIENTS are done,
ARCHITECTS NEED to draw up an ARCHITECT –
OWNER AGREEMENT FORM that will serve as a
signed BOND between THE CLIENT and THE
ARCHITECTS: ARCHITECT

OBLIGATIONS  A CONTRACT AGREEMENT must be a WELL-

and DETAILED instructions on what the project will involve.
CONTRACTS
 It must have the signatures of both parties where they
agree to accept all terms and conditions in accordance
with the Interior Design project
  This agreement is important and a protection for both
the client and Architect.
 Instances occur when the client is displeased with the
IMPORTANCE service provided and finds out that he/she did not sign a
tight agreement with the professional. Client doesn’t
OF HAVING A have much he/she can do even if she decides to file a
WELL BREACH OF CONTRACT against the ARCHITECT.
 ARCHITECTS, some clients are expecting more work
DETAILED
done than they initially expected. If it is not in the
CONTRACT agreement, Client’s displeasure is evident. Conflicts
AGREEMENT may arise in the course of the project.
 Without a tight agreement, acceptable to and signed
by both parties, the Architect is not liable.
  THE ARCHITECT: provides professional services to an
individual or a business, and in order to have the project run
smoothly, and avoid conflicts between parties, a well-detailed
WHO final agreement must be reached, drawn up and signed.

REQUIRES  THE CLIENT/BUSINESS ORG: that employs the

AGREEMENT services of the ARCHITECT needs to know every detail of what to
expect and also wants to be clear on the terms and conditions of
DOCUMENT the project, how it will be managed and its entire arrangement.
S
 The CONTRACT AGREEMENT should serve as the whole
agreement between two parties who by signing the documents,
agree to accept all the terms pursuant to the OWNER
ARCHITECTS DESIGN Contract
  CLAUSES are very specific provisions in a legal
agreement that relates to the important point of
What is a understanding between the parties engaged in the
CONTRACT
CLAUSE in an  A CLAUSE dictates certain conditions under which the
AGREEMENT parties agree to act during the term of the contract.
or CONTRACT  CLAUSES can be termed as fairly standard in every
contract and are generally agreed upon with little
debate or negotiations.
  MUST CONTAIN THE FOLLOWING:

 1. DETAILED SPECIFICATIONS

 2. SCOPE OF WORK
ARCHITECTS
 3. CONCEPTUAL and CONSTRUCTION DRAWINGS
AGREEMENTS
CLAUSES  4. CONSULTANTS and CONTRACTORS

 5. DESIGN FEES

 6. PRICE GUARANTEES

 7. PURCHASING and PROCUREMENTS

 8. REFUNDS

 9. CANCELLATIONS

 10. REIMBURSABLE COSTS

 11. PAYMENT TERMS

 12. INSURANCE

 13. PHOTOGRAPHING COMPLETED WORKS

  Designers must develop specifications of all works to
be done as detailed on plan and 3D drawings.
Specifications may include material and product
DETAILED finishes, building utilities and technologies systems
interior furnishing specifications like color schemes,
SPECIFICATIONS fabric choices, proposed lighting, furniture and other
furnishing. Include all other Architectural design and
interior design construction work as required to
complete the project
  This is where the designer must exhaustively detail all
scope of works. Must be as comprehensive and be
detailed on what needs to be done and delivered to the
client. This include services from the contractors like
Architectural, Plumbing/Sanitary, lighting and
SCOPE OF WORKS engineering contractors and will not include
modifications and alterations to structural, plumbing,
heating, electrical, air conditioning or ventilating
systems in the design project.
  Detailed blueprints containing all construction
drawings must be attached to the agreement form
between both parties.
 There must be clarity as to the purpose of the designs
CONCEPTUAL and must be stated how they can and cannot be used.
and
 The client must ensure as well that he/she can provide
CONSTRUCTION
accurate information to the designer.
DRAWINGS
 There must be a clear statement affirming that all
blueprints and other attached documents must not be
used by the CLIENT for any purpose other than what is
laid out in the CONTRACT AGREEMENT
  An Architect is not a general contractor when scope of
works is only for the regular design services.
 There must be inputs of consultants and contractors,
the client must enter into a separate contract for the
consultants and contractors and or consultants/AEDS
CONSULTANTS  An Architect will not provide a warrant, guarantee, or
and certification of their part of the project and neither will
CONTRACTORS the ARCHITECT be responsible for the quality of their
works, materials used, their performance and duration
of works.
 However the ARCHITECTS SHALL SUPERVISE them
for the conformity to the DESIGN CONSTRUCTION
DRAWINGS and CONCEPT.
  An ARCHITECT-OWNER AGREEMENT FORM must include the
FEE STRUCTURE and how charges will be made, and when each
payment stage will be implemented.

 The CLIENT must pay according to the terms, when an invoice is

presented. Upon signing the agreement, a client shall pay the
designer a non-refundable deposit which establishes a minimum
fee for all REGULAR DESIGN SERVICES. The deposit will be
DESIGN FEES credited against all fees payable to the designer upon completion
of the project.

 The Designer must be clears on how he/she plans to charge and

must be clearly stated in the agreement papers.

 There must be no assumptions or else it will be open to disputes in

the course of the project.
  An ARCHITECT cannot guarantee prices of materials
and merchandise. Installations or other services not
performed by him or her, because vendor pricing is
subject to change.
 If a CLIENT is unsure or indecisive, usually takes longer
PRICE to make firm decisions, a vendor’s change in price will
GUARANTEES be out of the designer’s control.
 There must be an added clause on PRICE
GUARANTEES so that the client is aware of market
price fluctuations and pricing changes when there are
change orders ordered by the client.
  A designer will not place orders nor procure goods on
behalf of a client until the receipt of a deposit.
 Vendors/Suppliers require full payments when an order
PURCHASING is placed so the client is expected to pay in full such
goods. These must be stated in the CONTRACT
and AGREEMENT Form.
PROCUREMENT  The Designer may also give specifications to the client
in cases where the Client prefers to purchase directly
from the vendors/suppliers. This type of arrangement is
what we call OWNER-SUPPLIED MATERIALS.
  In INTERIOR DESIGN SERVICES OF THE ARCHITECTS,
Once FF and E – Furniture, Furnishings and
Equipment have been purchased from
vendors/suppliers, most sellers have that no return no
exchange policy. Customized and specially produced
items cannot be returned.

REFUNDS
 Ideally if the ARCHITECTS and/or INTERIOR
DESIGNERS have been paid for these purchases, these
remain non- refundable and even if items are returned.
These cases stem when a CLIENT is unhappy about the
choices and tries to pull a fuss, so to protect the Interior
Designer, a REFUND CLAUSE must be included in
the AGREEMENT CONTRACT
  This clause is important to be included in a contract.
 This has the same personality as REFUNDS,
CANCELLATIONS of orders placed after the signing of
the contract cannot be affected.
 If a client wants to cancel an already agreed upon
CANCELLATIONS order, he/she will be responsible for the payment to
cover the cancellation costs which can be billed hourly,
depending on the Interior Designer agreement.
 Other instances, requests to cancel will be assessed on
a per-item basis with no guarantees of the cancellation.
Interior designers must make sure clients approve by
signing their choses proposal before any purchases.
  Contract Agreement forms must have clauses that
indicate a client agrees to reimburse the designer for
any out of pocket expenses incurred by him or her in
relation to project. This may include things like freight
or postage charges, delivery and storage costs,
REIMBURSABLE transportation costs if out of town projects. Drafting
EXPENSES and rendering services are not included in the
reimbursable expenses.
 Travels, meals and lodging form part of the
reimbursable expenses that must be stated in the
agreement
  A designer is expected to present to the client with the
expected PAYMENT TERMS before a CONTRACT
AGREEMENT| is signed. Client must be aware as to
when to pay for services rendered by the designer at
what stage of the professional work done by the
designer.
PAYMENT  The Designer must state clearly in the agreement that
and billings and invoices that are due 15-30 days late
PAYMENT (depending on the designer) will accrue late fee
charges.
TERMS  ARCHITECTS may also add a clause stating that the
work will cease and delivery of the items withheld until
all due billings and invoices are cleared.
  There must be INSURANCE COVERAGE for all
CONSTRUCTION and FF and E, materials during
construction, handling, moving and installations.

 Clients must be made clear that they are responsible for the
payment for these INSURANCE.
INSURANCE  A client must not work without INSURANCE and an
ARCHITECT will not allow works to commence without
adequate insurance cover by the CLIENT.
 CGLI – CONTRACTORS GENERAL LIABILITY
INSURANCE
 CARI – CONTRACTORS ALL RISK INSURANCE
  A Portfolio is very important for any design
professional. For the ARCHITECTS portfolio of works,
the client must agree to allow the designer to
photograph the project through all its stages of works
and after the completion of the project.

PHOTOGRAPHING
COMPLETED  There should be an agreement from both parties for
WORKS “BEFORE and AFTER” pictures.

 If the photographs will be used for posting online, on

social media, or for marketing and advertising, the
DESIGN PROFESSIONAL must agree not to disclose
the client’s name or address unless the client consents
on it.
  ARCHITECT-OWNER Contract Agreement CLAUSES
are not limited to the 13 mentioned. There are some
additional terms and conditions an DESIGNER may
wish to be included in the agreement.

ADDITIONAL  - REVISION LIMITATIONS (2-3 revisions only)

THINGS TO  - FEES FOR WORK DELAYS
 - DAMAGES
CONSIDER  - EXPIRATION OF AGREEMENT
 - ACCESS TO PROJECT SITE
 - OWNERSHIP OF DESIGNS
 - INDEMNITY
 - SITE VISIT LIMITATIONS
  Whenever and wherever the ARCHITECTS requires additional
terms, legalities and eligibilities, it is best to talk and consult or
even hire a LEGAL PROFESSIONAL to determine if these clauses
are right for you and your business/practice.
 ONE LAST CLAUSE: “ WHO OWNS THE DESIGN”
- The ARCHITECT retains the ownership of the
ADDITIONAL ARCHITECTURAL DESIGN CONCEPT, COPYRIGHTS, SKETCHES,
PLANS and 3D DRAWINGS, SAMPLES, SWATCHES,
NOTES INTELLECTUAL PROPERTY, PATENTS, and any other materials
prepared for the PROJECT. The ARCHITECTURAL DESIGN
AGREEMENT must show these PROPRIETORY RIGHTS. (SEC33 of
RA 9266)
- The CLIENT does not have any right to share or use the
design for any project except the one without the explicit written
permission of the DESIGNER.
 THE END