Lucidity is defined as clearness of thought or style. In its recent revisions to the A310 (Bid Bond) and A312 (Performance Bond and Payment Bond), the American Institute of Architects (AIA) attempts to provide a clearness of thought and style.
The first publication of AIA’s standard bond form was in 1911. The most recent revisions were in 1970 for the bid bond and 1984 for the performance bond and payment bond forms. In 2009, the AIA began revising the bond forms to reflect years of court interpretation of the traditional bond language. However, as admitted by the AIA, some changes were made simply to "clarify language" in the long-standing bond forms.
You can review the AIA’s Bond Form Commentary and Comparison (pdf). Here are some of the major changes:
- The introductory legalese is now gone. Do you remember the "Know all men by these present, that we [contractor], as Principal, hereinafter called the Principal, and [surety], a corporation duly organized under the laws of the State of ______________as Surety, hereinafter called the Surety, are held and firmly bound unto …" ? Principal, obligee, surety … all that stuff is now gone! Now, you will find an introductory section that lists Contractor, Surety, Owner, Bond Amount and Project. Now that’s clear!
- Bid bond form addresses time for acceptance of bids and statutory requirements. For various reasons, time limits for acceptance of bids are sometime extended. The revised document allows for up to a 60-day extension of the time for acceptance of the bid (as between owner and contractor), but the surety must be notified and provide consent to extend the bid bond. In addition, there is necessary language for public projects that have certain statutory requirements.
- Performance bond eliminates owner-surety conference prior to termination and reduces certain waiting periods. Under prior documents, the owner had to request a conference when addressing contractor default. Some courts held this to be a condition precedent to the surety’s obligation under the bond. Now, the owner may, but is not required to, request a conference as part of its notice of potential contractor default. In addition, the new form deletes the 20-day waiting period for terminating the contractor after notice of default. Finally, the new form reduces the 15-day waiting period to a 7-day waiting period for a surety (not contractor) default.
- Payment bond makes a number of clarifications to payment obligations, notices and claims, and compliance with bond provisions. First, Section 2 was revised to better reflect the parties’ obligations under the payment bond. The revisions also clarifies the difference between a "notice" of nonpayment and a "claim" that is sent to the surety. Finally, a new Section 7.3 was added to clarify that a surety’s failure to act under the bond is not a waiver of defenses. However, the surety may have to indemnify (repay) the claimant’s attorney fees if the surety fails to file an answer or fails to pay undisputed amounts.
While there are a number of other changes, these represent many of the provisions that make the AIA bond forms more clear … more lucid.