AIA A312 PDF

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Please contact customerservices lexology. Probably the most notable feature of the new A is the addition of language that would avoid the effect of National Union Fire Insurance Co. David A. Bramble, Inc. Under the A form, the surety has 45 days from receiving a payment bond claimant's notice of bond claim to provide the claimant with a response "stating the amounts that are undisputed and the basis for challenging any amounts that are disputed. Few courts that have addressed the issue in the years since have agreed with the Bramble court's holding, but the issue has not been definitively addressed in most jurisdictions.

In opposition to the adoption of the Bramble holding by courts in other jurisdictions, sureties have argued, among other things, that the penalty of a waiver of all defenses is too steep, that construing a surety's silence as a waiver contravenes longstanding principles of contract interpretation, and that the day period is too short to conduct an investigation on a complex construction project, especially given that the claimant is required to give little information in order to provide notice of its claim.

The surety industry's concerns have resulted in changes in the new form. Under the A form, the surety has 60 days to respond to the claimant, and for those subcontractors without a direct contract with the bond principal, this period starts to run only when the claimant provides the surety with a written statement similar to that required under public works bonds. The most significant change is an explicit rejection, in Section 7. The new form provides that the claimant is not entitled to such a waiver if the surety fails to respond, but can recover attorney's fees incurred in seeking amounts found to be due and owing to the claimant.

The American Subcontractors' Association has criticized this new provision , calling it "unfathomable" and arguing that it is unfair to bond claimants, who in some jurisdictions can lose entirely their rights to payment under a bond if they fail to comply strictly with its notice provisions, including claim submission deadlines. It remains to be seen how widely used the A form will be in both the short and long term.

For years, the A form has been relatively common in the industry. Owners and contractors, who generally mandate specific bond forms in their construction contracts with contractors and downstream subcontractors, will not be required to use the new form in place of the previous version, so the A may well continue to see significant use in the coming years.

It's worth noting that sureties, obligees, and bond principals can amend the bond language, so even where an A form is used, it may include additional language similar to that in the new form, expressly disclaiming any intent to waive defenses from the surety's failure to respond to a notice of claim. Such language has been added to the A form for many projects since the Bramble decision came down; in , the AIA even came out with its own such amendment to the A to deal with the waiver issue.

But not all users of the AIA A necessarily included this new amendment in the A payment bonds mandated for their projects. So all parties have to pay close attention to the specific payment bond issued for their specific project in submitting and responding to bond claims. As they say in the industry: RTFB. If you would like to learn how Lexology can drive your content marketing strategy forward, please email enquiries lexology.

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The newly released AIA A312-2010 performance and payment bond forms

Please contact customerservices lexology. Probably the most notable feature of the new A is the addition of language that would avoid the effect of National Union Fire Insurance Co. David A. Bramble, Inc. Under the A form, the surety has 45 days from receiving a payment bond claimant's notice of bond claim to provide the claimant with a response "stating the amounts that are undisputed and the basis for challenging any amounts that are disputed. Few courts that have addressed the issue in the years since have agreed with the Bramble court's holding, but the issue has not been definitively addressed in most jurisdictions. In opposition to the adoption of the Bramble holding by courts in other jurisdictions, sureties have argued, among other things, that the penalty of a waiver of all defenses is too steep, that construing a surety's silence as a waiver contravenes longstanding principles of contract interpretation, and that the day period is too short to conduct an investigation on a complex construction project, especially given that the claimant is required to give little information in order to provide notice of its claim.

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Never accept an AIA A312 performance bond from a subcontractor

This is not a single combined Performance and Payment Bond. It is customary to issue these two bonds simultaneously and to pay one premium for both. The separate procurement of one bond without the other will normally not reduce the premium. This assurance is limited by the amount of each bond. Related Documents. Use of Current Documents.

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