Electronic Transfer of Documents

pexels-photo-577210Electronic Transfer of Documents
By, Powell, Trachtman, Logan, Carrle & Lombardo, P.C.*

I. What’s at stake?
Clients, contractors and subconsultants frequently request that your work product be supplied in an
electronic format. Such a request may require that you transfer an image file of the documents or
that you distribute an “intelligent” version of the CADD file to other project participants. Such
requests raise a variety of liability issues. The transfer of work product electronically –
particularly as changeable CADD files – creates increased potential for errors, delays, misuse of
the work product, copyright infringement and other liabilities. What’s more, it is often more
difficult to detect errors
and discover their source than with traditional hard-copy work products. Properly addressing the
transfer and use of electronic documents can avoid these liability issues and increase the
potential for a successful project.

II. Key issues
Purpose and Limitations on Use – It is essential that you define the purpose for which the
electronic documents may be used. Any limitations inherent in the electronic documents must be
reflected in the permitted uses.

Procedures – It is critical that you and the recipient of the documents reach a common
understanding on the technical requirements for the delivery and use of the files. Equally
important, you should create a method for verifying the content of the files at the time of
transfer. That verification process is essential to avoid errors and omissions going forward.
Furthermore, in the event of a future dispute or litigation, it enables the parties to confirm the
nature of the file’s content at the time of transfer.

Ownership of Intellectual Property – Your copyrights in your instruments of service as defined in
your agreement with the client should be reaffirmed and applied to any documents transferred
electronically. The ultimate recipient should not have any greater rights in your instruments of
service than those the recipient would have obtained as the result of a traditional distribution of
those materials. Furthermore, if you are the recipient of an electronic file, you need to exercise
reasonable care to ensure that the party providing you the file possesses the rights necessary to
enable you to use them as intended and conveys those rights to you.

Restrictions on Your Liability – When transferring work product electronically, it is essential
that you do not create liabilities that are broader than those that would exist as the result of
the production and delivery of documents in a traditional manner. When you supply electronic
documents for the convenience of the recipient, you should not eliminate any of the recipient’s
existing obligations under its contract. Doing so could cause you to assume liability that
otherwise rested with the recipient and these liabilities may not be insurable.

III. Negotiating tips

Written Agreement – You should address the agreement of the parties in regard to the electronic
transfer of documents in writing. To minimize your administrative burden in a project that is
likely to have frequent electronic transfers among parties, the agreement can be incorporated into
the project specifications. Then, each transfer only needs to make reference to those terms and
provide a detailed itemization of the files being transferred. The agreement should set forth:

• The identity of the recipient, the scope and duration of the rights granted, and the restriction
on further transfer

• The permitted use of the transferred files

• Any obligation on your part to update the files

• A description of what is being transferred, including the name, date and size of the file, and
the document name and version to which the file corresponds

• The format and media to be used and the amount of time that the recipient has to determine that
the files are intact and represent what was to be delivered

• The legal protections to which you are entitled in connection with the recipient’s use of the
transferred file

Parties – Ideally, you should avoid the creation of a new contractual relationship as the result of
electronic transfer of documents. Therefore, transfers to contractors or others outside your design
team should occur through your client.

Restrictions on Your Obligations and on the Permitted Uses – This is perhaps the most critical
element of the transaction. The parties must agree on the intended use of the electronically
transferred files and on any obligation on your part to update the materials supplied.

For example, are the electronic documents intended to function for the construction of the project
or are they provided in electronic form merely as a convenience to the recipient to be used for
some other purpose? If the documents are to be supplied for construction use, many of the liability
concerns raised here can be resolved by providing the documents in a “read-only” image format that
cannot be manipulated.

However, if the documents are to be distributed for some other purpose, particularly if they are in
a format that enables the recipient to alter the files, the purpose and limitations on use must be
defined by reflecting the inherent limitations in the documents. If, for example, the documents are
not final, are not drawn to scale or do not contain all of the elements of the project, those
limitations should be identified and the permitted uses appropriately restricted.

If you are requested to supply documents for a previously completed project, the fact that your
documents are construction drawings and not record drawings and/or do not reflect alterations that
may have occurred subsequent to completion of the project should be made clear to the recipient.

Where electronic documents are not supplied for construction purposes, there must be a clear
statement that the printed copies of the documents are for the project and control in the event of
any conflict. Typically, where the documents are transferred to a contractor or other project
participant, there is a desire that they be used in the submittal process so as to eliminate the contractor’s need to “redraw” an element. That limited purpose should be specifically defined and the contractor’s responsibility for the completeness and accuracy of the resulting submittal should be reconfirmed.

Finally, it is essential that the traditional exclusions of liability for construction means and
methods and for jobsite safety are not eliminated because of the electronic transfer of documents.
All of the restrictions on your liability for the preparation of construction documents as set
forth in your agreement with your client should be incorporated in the transfer.

Release and Indemnification – Where the electronic distribution is not a project deliverable, but
is provided as a convenience to other parties for their use in satisfying their own contractual
obligations, it is essential that you obtain a release and indemnification from the recipient for
claims that arise from the use of the electronic files. While a broad release and indemnity from
all claims related to the use of the files by the recipient is ideal, attempts to be released and
indemnified against the consequences of your own negligent performance may be invalid in some
states. Applicable state law must be reviewed to determine if statutes that restrict or prohibit
the use of indemnifications by design professionals apply. Furthermore, the intended protections
must be carefully drafted to address only the liabilities that result from the electronic transfer
rather than from the performance of the services themselves.

While electronic documents can be a quicker, more efficient way to move a design project forward,
having the right controls around their usage and transfer are critical to minimizing liability, and
bringing a successful project to fruition.
* Powell Trachtman Logan Carrle & Lombardo, P.C. was formed in 1988. A substantial portion of their
practice is devoted to the representation of design professionals. Powell, Trachtman, Logan, Carrle
& Lombardo, P.C. represents businesses and individuals throughout much of Pennsylvania, New Jersey, and Delaware.

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