Since its promulgation in 1984, The American Institute of Architects' (AIA's) A312 payment bond form has been widely used throughout the construction industry. However, three recent court decisions in Florida, Maryland and Virginia interpreting A312's claim response requirements have prompted the bonding industry to campaign against A312's continued use.
The heart of the controversy concerning A312 is the language that requires a surety to "[s]end an answer to the Claimant, with a copy to the Owner, within 45 days after receipt of the claim, stating the amounts that are undisputed and the basis for challenging any amounts that are disputed."
Although the three court cases differ in many respects, in each of them the subcontractor was able to recover against the surety because the surety waived certain defenses to the subcontractor's claim by failing to provide the required response within the 45-day period prescribed in A312. Had the sureties responded as required or raised these defenses within the 45-day period, they would have been able to raise them in opposition to the subcontractors' claims.
Relevant court decisions