By Aileen Leipprandt
While historically construction professionals may have paid little attention to the fine print on AIA payment bonds, lean times in construction have triggered more payment bond claims than ever.  New in 2010, the American Institute of Architects (AIA) has issued revised bond forms, including revised Payment and Performance Bond, A312™-2010 and revised Bid Bond A310™-2010 (Bond Forms).  The AIA process of revising the A312™-1984 Performance and Payment Bonds and the A310™-1970 Bid Bond began in 2009 and included solicitation of input from various industry groups and consideration of court opinions interpreting the language of the bonds.  While the Bond Forms retain much of their original terms, there are several changes that clarify language and attempt to address the concerns of various stakeholders.  Of particular interest are the following noteworthy changes to the A312™-2010 Payment Bond.

Claimant.  The definition of “Claimant” has been expanded to include anyone who can file a construction lien.  Under A312™-1984, claimants were more narrowly defined to include only first and second tier subcontractors to the bond principal.

Surety Response.  A312™-1984 provided that the surety had 45 days to respond to a claim and state the basis for challenging any amounts that were in dispute.  The A312™-2010 now gives the surety 60 days to respond to a bond claim.

Surety Waiver of Defenses.  Some courts found that the surety’s failure to strictly comply with its reply obligations resulted in a waiver of the surety’s defenses under the bond.  A312™-2010 now provides that if the surety fails to respond within the 60-day time frame, such failure does not waive any defenses the surety may have.  If, however, the claimant has to bring a claim under the bond, and the claimant is successful on that claim, the surety must pay the claimant’s attorney fees, even if those attorney fees exceed the penal sum of the bond.

Detailed Claim.  Under A-312™-1984, a claimant initiated a claim against the bond by sending notice to the surety. That notice only had to state the amount of the claim, and in some circumstances, the name of the party to whom the claimant furnished labor and materials.  A-312™-2010, how defines “claim” and requires that the claim  contain certain specific information such as a copy of the contract or purchase order, the total amount claimant earned, and the total amount of previous payments the claimant received.  A letter to the surety generally describing claims and demands will not be sufficient to state a claim and to start the clock running on the surety’s 60-day time to respond.

The AIA also revised language in the performance bond to provide a more stream-lined process for making a claim under the bond and for defaulting the surety.  Likewise, the AIA modified the standard bid bond, A310™-2010, to include language that allows for up to a 60-day extension of time for acceptance of the bid specified in the bid documents.  The surety, however, must be notified and consent to any extension of the date for acceptance of the bid by more than 60 days in the aggregate.