The Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010 under consideration at the moment will remove the exception architects and engineers have in complying to the 'Fit for Purpose' warranty that consumers currently enjoy on a whole range of other services and products.
We actually think this is a good thing, although feedback from the likes of the Association of Consulting Engineers Australia seems to indicate they think otherwise (taken from their submission):
Consult Australia asks the Senate Economics Committee to recommend in its report that the exemption for architects and engineers be reintroduced into the Bill. Consult Australia recommends this for the following
1) Consumers, when they engage the services of a professional engineer or architect, are well protected
by s74(1) of the TPA; the law of negligence; and their contract terms and conditions. The addition of
a fitness for purpose warranty provides no meaningful additional protection to a consumer in the
context of professional services but it does significantly open up the extent of risk faced by the
2) Building and construction projects involve multiple parties in the delivery of a project. It is the builder
or contractor that delivers the end product and the architect or engineer should not be required to
warrant the performance of other parties, particularly as it has no control over the other parties or the
quality of their work.
3) The introduction of an implied fitness for purpose warranty introduces substantial risk for engineers,
architects and their insurers because it exposes them to the risks associated with the performance and
behaviour of other participants involved in delivery of the project. These additional risks will drive up
the cost of services and Professional Indemnity Insurance.
4) Absolute fitness for purpose warranties that pose greater liability risk will lead to engineers and
architects adopting more conservative approaches in their designs thus increasing project outturn
costs and acting to reduce innovation.
5) There is overwhelming evidence that inadequate project scope definition in Australia has led to
significant cost wastage, through failed projects and extensive litigation. Engineers and architects
should not be responsible for the client’s change of scope and purpose or for the time and cost
constraints, imposed by the client, that adversely impact on the development of a detailed and
specific project and scope definition. Exposing engineers and architects to fitness for purpose
warranties will only inflate the wastage further, driving competition out of the industry as many
businesses will not survive in such circumstances.
6) Removal for the exemption will particularly impact small businesses working in the residential sector
because of increased risk, costs and disputation. This has broader implications for housing
affordability if the cost of professional services increases and competition is reduced in the small
business sector. These outcomes are contrary to the intention of the Trade Practices Act.
7) There is inadequate policy evidence to demonstrate that the detriment caused to engineers and
architects by removal of the exemption, from the implied fitness for purpose warranty, will be
outweighed by the benefit to consumers.
8) The New Zealand Consumer Guarantees Act 1993 contains an explicit contracting out provision for
agreements between suppliers and consumers that acquire services for the purposes of a business.
This exemption has not been carried across into the Australian Consumer Law.
We respectively consider this to be a load of hogwash. Firstly, they talk about additional risk being carried by the architect, hold on so does that mean the consumer is carry this risk currently? Given the consumer is spending probably a significant sum of money, perhaps a large chunk of their personal wealth, we think this is very 'rich' - the consumer could be lumped with a 'lemon' of a build while the architect on the other hand is in a position to move onto other projects and 'spread' their risk that way through obtaining more work.
Also we like point #5, inadequate project scope definition, hold on - who set the project scope in the first place? Ah, the architect, so they do not want to be held responsible for their own lack of due diligence in precise project scope definition.
Why should something that we live in be exempt from being 'fit for purpose' - pretty much everything else we buy and interact with is covered by this legislation - why not the house one lives in?
Yes, we know a house designed by an architect is 'custom' - but the standards that exist for buildings does not give exception to architect designed buildings; similarly the standards that exist for the likes of cars,chairs,electronic devices, etc do not exempt their manufacturer from compliance from the law, and there any many many different types of such products (billions probably) - basically, the 'buck' needs to stop somewhere.
As for it raising the cost; it will a bit - but given all architects will be required to carry this additional cost, the law of market forces will minimize the cost impact. So the tails of woe are very much overestimated.
The real issue here is that certain Architects have been able to get away with bad practices and not really implementing what they claim to (for instance Eco Architects, when the building standards in Australia pretty much force a new build to be Eco anyways, so where is the value add?). Having Architects covered under the 'Fit for Purpose' requirement will require such Architects to provably demonstrate that their designs are indeed doing what they claim, or face the music.