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1 The Contractor and the Surety, jointly and severally, which it may be liable to the Owner and, as
<br /> bind themselves, their heirs, executors, administrators, soon as practicable after the amount is deter-
<br /> successors and assigns to the Owner for the performance mined, tender payment therefor to the
<br /> of the Construction Contract,which is incorporated herein Owner; or
<br /> by reference. .2 Deny liability in whole or in part and notify the
<br /> 2 If the Contractor performs the Construction Contract, Owner citing reasons therefor.
<br /> the Surety and the Contractor shall have no obligation 5 If the Surety does not proceed as provided in Paragraph
<br /> under this Bond, except to participate in conferences as 4 with reasonable promptness,the Surety shall be deemed
<br /> provided in Subparagraph 3.1. to be in default on this Bond fifteen days after receipt of an
<br /> 3 If there is no Owner Default, the Surety's obligation additional written notice from the Owner to the Surety
<br /> under this Bond shall arise after: demanding that the Surety perform its obligations under
<br /> this Bond,and the Owner shall be entitled to enforce any
<br /> 3.1 The Owner has notified the Contractor and the remedy available to the Owner. If the Surety proceeds as
<br /> Surety at its address described in Paragraph 10 below provided in Subparagraph 4.4,and the Owner refuses the
<br /> that the Owner is considering declaring a Contractor payment tendered or the Surety has denied liability, in
<br /> Default and has requested and attempted to arrange a whole or in part,without further notice the Owner shall be
<br /> conference with the Contractor and the Surety to be entitled to enforce any remedy available to the Owner.
<br /> held not later than fifteen days after receipt of such
<br /> 6 After the Owner has terminated the Contractor's right
<br /> notice to discuss methods of performing the Construc-
<br /> tion Contract. If the Owner, the Contractor and the to complete the Construction Contract, and if the Surety
<br /> Surety agree,the Contractor shall be allowed a reason- elects to act under Subparagraph 4.1, 4.2, or 4.3 above,
<br /> able time to perform the Construction Contract, but then the responsibilities of the Surety to the Owner shall
<br /> such an agreement shall not waive the Owner's right,if not be greater than those of the Contractor under the
<br /> any,subsequently to declare a Contractor Default; and Construction Contract, and the responsibilities of the
<br /> Owner to the Surety shall not be greater than those of the
<br /> 3.2 The Owner has declared a Contractor Default and Owner under the Construction Contract.To the limit of the
<br /> formally terminated the Contractor's right to complete amount of this Bond, but subject to commitment by the
<br /> the contract. Such Contractor Default shall not be de- Owner of the Balance of the Contract Price to mitigation of
<br /> clared earlier than twenty days after the Contractor and costs and damages on the Construction Contract,the Sure-
<br /> the Surety have received notice as provided in Sub- ty is obligated without duplication for:
<br /> paragraph 3.1; and
<br /> 6.1 The responsibilities of the Contractor for correc-
<br /> 3.3 The Owner has agreed to pay the Balance of the tion of defective work and completion of the Construc-
<br /> Contract Price to the Surety in accordance with the tion Contract;
<br /> terms of the Construction Contract or to a contractor
<br /> selected to perform the Construction Contract in accor-
<br /> dance with the terms of the contract with the Owner. costs resulting from the Contractor's Default, and re-
<br /> sulting from the actions or failure to act of the Surety
<br /> 4 When the Owner has satisfied the conditions of Para- under Paragraph 4; and
<br /> graph 3, the Surety shall promptly and at the Surety's ex- 6.3 Liquidated damages, or if no liquidated damages
<br /> pense take one of the following actions:
<br /> are specified in the Construction Contract,actual dam-
<br /> 4.1 Arrange for the Contractor, with consent of the ages caused by delayed performance or non-perfor-
<br /> Owner, to perform and complete the Construction mance of the Contractor.
<br /> Contract; or
<br /> 7 The Surety shall not be liable to the Owner or others for
<br /> 4.2 Undertake to perform and complete the Construc- obligations of the Contractor that are unrelated to the Con-
<br /> tion Contract itself,through its agents or through inde- struction Contract, and the Balance of the Contract Price
<br /> pendent contractors; or shall not be reduced or set off on account of any such
<br /> 4.3 Obtain bids or negotiated proposals from unrelated obligations. No right of action shall accrue on
<br /> qualified contractors acceptable to the Owner for a this Bond to any person or entity other than the Owner or
<br /> contract for performance and completion of the Con-
<br /> its heirs, executors, administrators or successors.
<br /> struction Contract, arrange for a contract to be pre- g The Surety hereby waives notice of any change,includ-
<br /> pared for execution by the Owner and the contractor ing changes of time, to the Construction Contract or to
<br /> selected with the Owner's concurrence,to be secured related subcontracts, purchase orders and other obliga-
<br /> with performance and payment bonds executed by a tions.
<br /> qualified surety equivalent to the bonds issued on the
<br /> Construction Contract, and pay to the Owner the 9 Any proceeding, legal or equitable, under this Bond
<br /> amount of damages as described in Paragraph 6 in ex- may be instituted in any court of competent jurisdiction in
<br /> cess of the Balance of the Contract Price incurred by the the location in which the work or part of the work is located
<br /> Owner resulting from the Contractor's default; or and shall be instituted within two years after Contractor
<br /> 4.4 Waive its right to perform and complete, arrange Default or within two years after the Contractor ceased
<br /> for completion, or obtain a new contractor and with working or within two years after the Surety refuses or fails
<br /> reasonable promptness under the circumstances: to perform its obligations under this Bond,whichever oc-
<br /> curs first. If the provisions of this Paragraph are void or
<br /> .1 After investigation,determine the amount for prohibited by law,the minimum period of limitation avail-
<br /> ALA DOCUMENT A312•PERFORMANCE BOND AND PAYMENT BOND•DECEMBER 1984 ED. •AIA
<br /> THE AMERICAN INSTITUTE OF ARCHITECTS,1735 NEW YORK AVE., N.W.,WASHINGTON, D.C. 20W6 A312-19M 2
<br /> THIRD PRINTING•MARCH 1987
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