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BCT 478

AGENCY AGREEMENTS AND CONTRACT DELIVERY METHODS

AGENCY AGREEMENTS:

BCT 478

AGENT: 1. A person or business authorized to act on another's behalf.1 2. One that acts or has the power or authority to act.2 3. One empowered to act for or represent another: an author's agent; an insurance agent.2
1agent.

(n.d.). Dictionary.com Unabridged (v 1.1). Retrieved July 05, 2009, from Dictionary.com website: http://dictionary.reference.com/browse/agent
(n.d.). The American Heritage Dictionary of the English Language, Fourth Edition. Retrieved July 05, 2009, from Dictionary.com website: http://dictionary.reference.com/browse/agent

2agent.

AGENCY AGREEMENTS:

BCT 478

Agency Agreements must consist of the same basic elements as contract agreements. The parties to the agreement have the following legal roles:

A. Principal. B. Agent.
The principal authorizes the agent to represent the principal in certain specified business dealings with third parties. The relationship is consensual by mutual agreement.

The agents authority must come from the principal.


The agent is authorized to do only what the principal wants.

The agent can be placed in a position to exercise discretion and even enter into contracts which are binding on the principal.

AGENCY AGREEMENTS:

BCT 478

Principal is liable for all contracts made by the agent while the agent is acting within the scope of the stated and granted authority. If an act of the agent is unauthorized, the principal will not be bound by it, unless ratified by the principal.

Principal is liable for acts of negligence committed by the agent if the agent operates within scope of authority and in furtherance of the principals business. =>even if the agent acts in an irregular manner or contrary to the explicit instructions of the principal.
Therefore, responsibilities (scope) must be clearly defined by the terms of the agency agreement.

AGENCY AGREEMENTS:

BCT 478

Agent must display complete loyalty and good faith, obey instructions, and not attempt to exceed the authority that has been granted by the principal. All profits made from activities related to the agency agreement belong to the principal. The agent cannot compete with the principal, profit at the principals expense, or do any self-dealing, (otherwise considered conflict of interest or fraud).

OWNERS AGENTS:

BCT 478

In construction, owners agents are selected because of specific skills possessed (those skills/competencies that the owner does not keep inhouse). If damage results through negligence or lack of diligence, the agent will be liable to the owner.

The agent is not considered negligent for errors in judgment in most cases.
Generally, the owner exerts little control over the preparation of plans and specifications.=>this places the designer in the position of being an independent contractor. However, in some roles (such as inspection and administration), the designer acts as the owners agent.

OWNERS AGENTS:

BCT 478

Sometimes the owner will hire a separate person or organization to accomplish the construction management duties (other than design) such as inspection, coordination/scheduling, and contract administration. When this occurs, it is commonly called Agency CM (Agency Construction Management).

Be careful to distinguish this from an organization that is responsible for both building the project and performing CM duties. This is what I call CM @ Risk, but the text books call Constructor CM. The following three diagrams attempt to display the difference between the CM contract delivery methods and their contractual mechanics. In Agency CM, the construction manager is providing services to the owner and is not liable for lost profits and damages which can result from holding the role of builder/constructor. When the CM is also the General Contractor, it assumes the risk of a builder in addition to those of providing services, hence the name CM @ Risk. Sometimes both relationships exist through the Owner-CM contract agreement.

OWNERS AGENTS:

BCT 478

Agent CM
Owner
A A/E A CM

$
GC(s) Subcontractors A = Agent Relationship $ = Nonagent Relationship

OWNERS AGENTS:

BCT 478

Constructor CM
Owner
A A/E A$ CM

$
GC(s) Subcontractors CM A = Agent Relationship $ = Nonagent Relationship

Various Forms of Construction Management (CM) Contracts

Contractor CM
Owner
A A/E A$ CM

$
GC(s) Subcontractors A = Agent Relationship $ = Nonagent Relationship

BEST PRACTICE ASSIGNMENTS:

BCT 478

Hopefully this distinction will help you when completing the BP assignments (Section 2-Duties of Stakeholders). I have included some other contract delivery diagrams, which follow, for your information

Contractual Relations in Traditional and Design-Build Projects

General Contractor
Owner

$
GC

A
Supervision

A/E

$
Subcontractors 2nd Tier Sub A = Agent Relationship $ = Nonagent Relationship

Contractual Relations in Traditional and Design-Build Projects

Owners Own Force


Owner

$
Subcontractors 2nd Tier Sub

or

Direct Force

A = Agent Relationship $ = Nonagent Relationship

Contractual Relations in Traditional and Design-Build Projects

Design-Build & Turnkey


Owner

$
GC A/E

$
Subcontractors 2nd Tier Sub A = Agent Relationship $ = Nonagent Relationship

Various Forms of Construction Management (CM) Contracts

Design CM
Owner
A A/E CM

$
GC(s) Subcontractors A = Agent Relationship $ = Nonagent Relationship

Various Forms of Construction Management (CM) Contracts

Owner CM
Owner
A A/E

CM

$
GC(s) Subcontractors A = Agent Relationship $ = Nonagent Relationship

Various Forms of Construction Management (CM) Contracts

Owner/Design/CM
A/E Owner CM

$
GC(s) Subcontractors A = Agent Relationship $ = Nonagent Relationship