Introduction
The seemingly simple requirement that a surety answer a claim within 45 days after receipt of such claim (hereinafter referred to as the “45 Day Period”) as required under the AIA A312 Payment Bond (1984) has engendered much controversy and concern within the surety industry and has spawned much discussion. The controversy was generated by certain courts that have taken an extremely harsh and myopic view of the surety’s obligations under the A312 bond. According to these handful of courts, if a surety fails to respond to a claim within the 45 Day Period as required by the bond the surety’s defenses to the claim can be waived! Obviously, a loss of defenses can be a serious issue for any surety and surety claims professional and such a circumstance deserves significant scrutiny. However, perhaps equally important is the impact and effect that the “waiver interpretation” of the 45 Day Period may have on the handling of claims under the AIA A312 for surety claims professionals.