1. The Contractor and the Surety, jointly and severally,
bind themselves, their heirs, executors, administrators,
successors, and assigns to the Owner for the performance
of the Construction Contract, which is incorporated herein
by reference.
2. If the Contractor performs the Construction Contract,
the Surety and the Contractor shall have no obligation
under this Bond, except to participate in conferences as
provided in Subparagraph 3.1.
3. If there is no Owner Default, the Surety’s obligation
under this Bond shall arise after:
3.1 The Owner has notified the Contractor and the
Surely at its address described in Paragraph 10 below
that the Owner is considering declaring a Contractor
Default and has requested and attempted to arrange a
conference with the Contractor and the Surety to be
held not later than fifteen days after receipt of such
notice to discuss methods of performing the Construc-
tion Contract. If the Owner, the Contractor and the
Surety agree, the Contractor shall be allowed a reason-
able time to perform the Construction Contract, but
such an agreement shall not waive the Owner's right, if
any, subsequently to declare a Contractor Default; and
3.2 The Owner has declared a Contractor Default and
formally terminated the Contractor's right to complete
the contract. Such Contractor Default shall not be de-
clared earlier than twenty days after the Contractor and
the Surety have received notice as provided in Sub-
paragraph 3.1; and
3.3 The Owner has agreed to pay the Balance of the
Contract Price to the Surety in accordance with the
terms of the Construction Contract or to a contractor
selected to perform the Construction Contract in accor-
dance with the terms of the contract with the Owner.
4, When the Owner has satisfied the conditions of Para-
graph 3, the Surety shall promptly and at the Surety's ex-
pense take one of the following actions:
4.1 Arrange for the Contractor, with consent of the
Owner, to perform and complete the Construction
Contract; or
4.2 Undertake to perform and complete the Construc-
tion Contract itself, through its agents or through inde-
pendent contractors; or
4.3 Obtain bids or negotiated proposals from
qualified contractors acceptable to the Owner for a
contract for performance and completion of the Gon-
struction Contract, arrange for a contract to be pre-
pared for execution by the Owner and the contractor
selected with the Gwner's concurrence, to be secured
with performance and payment bonds executed by a
qualified surety equivalent te the bonds issued on the
Construction Contract, and pay to the Owner the
amount of damages as described in Paragraph 6 in ex-
cess of the Balance of the Contract Price incurred by the
Owner resulting from the Contractor's default; or
4.4 Waive its rights to perform and complete, arrange
for completion, or obtain a new contractor and with
reasonable promptness under the circumstances:
-1 After investigation, determine the amount for which it may be
liable te the Owner and, as soon as practicable after the amount is
determined, tender payment therefore to the
Owner, or
2 Deny liability in whole or in part and notify the Owner
citing reasons therefore.
5. Ifthe Surety does not proceed as provided in Paragraph
4 with reasonable promptness, the Surety shall be deemed
to be in default on this Bond fifteen days after receipt of an
additional written notice from the Owner to the Surety
demanding that the Surety perform its obligations under
this Bond, and the Owner shall be entitled to enforce any
remedy available to the Owner. Ifthe Surety proceeds as
provided in Subparagraph 4.4, and the Owner refuses the
payment tendered or the Surety has denied liability, in
whole or in part, without further notice the Owner shall be
entitled to enforce any remedy available to the Owner.
6. After the Owner has terminated the Contractor's right
to complete the Construction Contract, and if the Surety
elects to act under Subparagraph 4.1, 4.2, or 4.3 above,
then the responsibilities of the Surety to the Owner shall
not be greater than those of the Contractor under the
Construction Contract, and the responsibilities of the
Owner to the Surety shail not be greater than those of the
Owner under the Construction Contract. To the limit of the
amount of this Bond, but subject ta commitment by the
Owner of the Balance of the Contract Price to mitigation of
costs and damages on the Construction Contract, the Sure-
ty is obligated without duplication for:
6.1 The responsibilities of the Contractor for correc-
tion of defective work and completion of the Construc-
tion Contract;
6.2 Additional legal, design professional and delay
costs resulting from the Contractor's Default, and re-
sulting fram the actions or failure to act of the Surety
under Paragraph 4; and
6.3 Liquidated damages, or if no liquidated damages
are specified in the Construction Contract, actual dam-
ages caused by delayed performance or non-perfor-
mance of the Contractor.
7. The Surety shall not be fiable to the Owner or others for
obligations of the Contractor that are unrelated to the Con-
struction Contract, and the Balance of the Contract Price
shall not be reduced or set off on account of any such
unrelated obligations. No right of action shall accrue on
this Bond to any person or entity other than the Owner or
its heirs, executors, administrators, or successors.
8. The Surety hereby waives notice of any change, includ-
ing changes of time, to the Construction Contract or to
related subcontracts, purchase orders and other obligations.
9. Any proceeding, legal or equitable, under this Bond may
be instituted in any court of competent jurisdiction in
the location in which the work or part of the work is jocated
and shall be instituted within two years after Contractor
Default or within two years after the Contractor ceased
working or within two years after the Surety refuses or fails
to perform its obligations under this Bond, whichever oc-
curs first. If the provisions of this Paragraph are void or
prohibited by law, the minimum period of limitation avail-
DOCUMENT A312 PERFORMANCE BOND AND PAYMENT BOND DECEMBER 1994 ED., AIA o
A 312-1984 2
THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVE., N.W., WASHINGTON, D.C.20006
THIRD PRINTING - MARCH 1987
