The new form provides for a waiver of all consequential damages among the owner, architect and contractor. The owner has much more to lose in consequential damages than the architect as a result of a default, but the architect's fee does not contemplate such an economic risk. If the architect defaults, the owner may suffer from the domino effect of delays, canceled leases and loss of rent as unrecoverable consequential damages. If the owner defaults, the architect may suffer overhead losses and have scheduling problems, but recovery of its fee and expenses as actual damages will make the architect whole. Owners will seek to strike this new provision.
Mediation is a nonbinding procedure to attempt to settle a dispute.
Arbitration is a binding procedure to conclusively resolve a dispute. The old form provided for only mandatory arbitration. The new form provides for mandatory mediation and, if successful, mandatory arbitration. Any provision to attempt to settle a dispute quickly and cost-effectively is desirable. This new provision is neutral and does not favor either party.