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<br />1 The Contractor and the Surety, vlntly and severally,
<br />bind themselves, their heirs, executors, administrators, suc-
<br />cessors and assigns to the Owner for the performance of
<br />the Construction Contract, which is incorporated herein by
<br />reference.
<br />
<br />2 If the Contractor performs the Construction Contract,
<br />the Surety and the Contractor shall have no obligation
<br />under this Bond, except to participate in conferences as
<br />provided in Subparagraph 3.1.
<br />
<br />3 If there is no Owner Default, the Surety's obligation
<br />under this Bond shall arise after:
<br />
<br />3.1 The Owner has notified the Contractor and the
<br />Surety at its address described in Paragraph 10 below
<br />that the Owner is considering declaring a Contractor
<br />Default and has requested and attempted to arrange a
<br />conference with the Contractor and the Surety to be
<br />held not later than fifteen days after receipt of such
<br />notice to discuss methods of performing the Construc-
<br />tion Contract. If the Owner, the Contractor and the
<br />Surety agree, the Contractor shall be allowed a
<br />reasonable time to perform the Construction Contract,
<br />but such an agreement shall not waive the Owner's
<br />right, if any, subsequently to declare a Contractor
<br />Default; and
<br />
<br />3.2 The Owner has declared a Contractor Default and
<br />formally terminated the Contractor's right to complete
<br />the contract. Such Contractor Default shall not be
<br />declared earlier than twenty days after the Contractor
<br />and the Surety have received notice as provided in
<br />Subparagraph 3.1; and
<br />
<br />3.3 The Owner has agreed to pay the Balance of the
<br />Contract Price to the Surety in accordance with the
<br />terms of the Construction Contract or to a contractor
<br />selected to perform the Construction Contract in ac-
<br />cordance with the terms of the contract with the Owner.
<br />
<br />4 When the Owner has satisfied the conditions of
<br />Paragraph 3, the Surety shall promptly and at the Surety's
<br />expense take one of the following actions:
<br />
<br />4.1 Arrange for the Contractor, with consent of the
<br />Owner, to perform and complete the Construction Con-
<br />tract; or
<br />
<br />4.2 Undertake to perform and complete the Construc-
<br />tion Contract itself, through its agents or through inde-
<br />pendent contractors; or
<br />
<br />4.3 Obtain bids or negotiated proposals from qualified
<br />contractors acceptable to the Owner for a contract for
<br />performance and completion of the Construction Con-
<br />tract, arrange for a contract to be prepared for execu-
<br />tion by the Owner and the contractor selected with the
<br />Owner's concurrence, to be secured with performance
<br />and payment bonds executed by a qualified surety
<br />equivalent to the bonds issued on the Construction
<br />Contract, and pay to the Owner the amount of damages
<br />as described in Paragraph 6 in excess of the Balance of
<br />the Contract Price incurred by the Owner resulting from
<br />the Contractor's default; or
<br />
<br />4.4 Waive its right to perform and complete, arrange
<br />for completion, or obtain a new contractor and with
<br />reasonable promptness under the circumstances:
<br />
<br />.1 After inv<-~dgation, determine the amount for
<br />which it may be liable to the Owner and, as soon
<br />as practicable after the amount is determined,
<br />tender payment therefor to the Owner; or
<br />
<br />.2 Deny liability in whole or in part and notify the
<br />Owner citing reasons therefor.
<br />
<br />5 If the Surety does not proceed as provided in
<br />Paragraph 4 with reasonable promptness, the Surety shall
<br />be deemed to be in default on this Bond fifteen days after
<br />receipt of an additional written notice from the Owner to the
<br />Surety demanding that the Surety perform its obligations
<br />under this Bond, and the Owner shall be entitled to enforce
<br />any remedy available to the Owner. If the Surety proceeds
<br />as provided in Subparagraph 4.4, and the Owner refuses
<br />the payment tendered or the Surety has denied liability, in
<br />whole or in part, without further notice the Owner shall be
<br />entitled to enforce any remedy available to the Owner.
<br />
<br />6 After the Owner has terminated the Contractor's right to
<br />complete the Construction Contract, and if the Surety elects
<br />to act under Subparagraph 4.1, 4.2, or 4.3 above, then the
<br />responsibilities of the Surety to the Owner shall not be
<br />greater than those of the Contractor under the Construction
<br />Contract, and the responsibilities of the Owner to the
<br />Surety shall not be greater than those of the Owner under
<br />the Construction Contract. To the limit of the amount of this
<br />Bond, but subject to commitment by the Owner of the
<br />Balance of the Contract Price to mitigation of costs and
<br />damages on the Construction Contract, the Surety is
<br />obligated without duplication for:
<br />
<br />6.1 The responsibilities of the Contractor for correction
<br />of defective work and completion of the Construction
<br />Contract;
<br />
<br />6.2 Additional legal, design professional and delay
<br />costs resulting from the Contractor's Default, and result-
<br />ing from the actions or failure to act of the Surety under
<br />Paragraph 4; and
<br />
<br />6.3 Liquidated damages, or if no liquidated damages
<br />are specified in the Construction Contract, actual
<br />damages caused by delayed performance or nonperfor-
<br />mance of the Contractor.
<br />
<br />7 The Surety shall not be liable to the Owner or others for
<br />obligations of the Contractor that are unrelated to the Con-
<br />struction Contract, and the Balance of the Contract Price
<br />shall not be reduced or set off on account of any such unre-
<br />lated obligations. No right of action shall accrue on this
<br />Bond to any person or entity other than the Owner or its
<br />heirs, executors, administrators or successors.
<br />
<br />8 The Surety hereby waives notice of any change, includ-
<br />ing changes of time, to the Construction Contract or to re-
<br />lated subcontracts, purchase orders and other obligations.
<br />
<br />9 Any proceeding, legal or equitable, under this Bond
<br />may be instituted in any court of competent jurisdiction in
<br />the location in which the work or part of the work is located
<br />and shall be instituted within two years after Contractor
<br />Default or within two years after the
<br />Contractor ceased working or within two years after the
<br />Surety refuses or fails to perform its obligations under this
<br />Bond, whichever occurs first. If the pro-
<br />visions of this Paragraph are void or prohibited by law, the
<br />minimum period of limitation avail-
<br />
<br />Printed in cooperation with The American Institute of Architects (AlA) by Willis. Willis vouches that the language in the document conforms exactly to the
<br />language used in AlA Document A312, December 1984 Edition. Third Printing March 1987
<br />WC1852B
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