Friday, 28 May 2010

Revised AIA form removes sureties responsibility for timely dispute claims

The American Institute of Architects (AIA) new editions of its A312 Performance Bond and Payment Bond and A310 Bid Bond will be published in June. The A310 was last revised in 1984, and the A312, in 1984.

AIA's commentary on the old and new forms, available online, contains the text of the updated bond forms. Of particular note to ccontractors, section 7.1 of the A312 (2010) Payment Bond provides sureties with 15 more days to respond to, and identify disputed parts of, claims — 60 instead of 45 days.

Furthermore, section 7.3 of the revised payment bond form greatly reduces the potential consequences for sureties that fail to dispute claims by the claim response deadline. Failure to timely dispute claims "shall not be deemed to constitute a waiver of defenses" for a surety or contractor, the bond form now says.

AIA's commentary notes that this change was made because "some recent court decisions have held that a surety's failure to strictly comply with its reply obligations… would result in a waiver of the contractor's and surety's defenses under the bond." The revised payment bond form does, however, allow claimants to recover reasonable attorney fees and "recover any sums found to be due and owing to the Claimant."

"This change relieving sureties of their obligation to meet claim response deadlines is unfathomable given the many subcontractors that have completely lost bond claims because they missed a claim deadline by a single day," said American Subcontractors Association (ASA) Executive Vice President E. Colette Nelson.

Read AIA's commentary Here.

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