AIA A312–2010 Performance Bond: Notices, Default and Deadlines

Updated September 7, 2026. This article addresses the AIA A312–2010 performance bond. Use the actual signed bond and amendments when evaluating a default or claim.

Read the triggering conditions together

Section 3 addresses notice of a possible contractor default, default and termination, and the remaining contract balance. Sending a general complaint does not necessarily satisfy the bond's requirements.

The prejudice exception is limited

Section 4 concerns failure to give the notice described in Section 3.1. It limits relief from the surety's obligations to demonstrated actual prejudice from that failure. It is not a blanket exception for every missed notice or other condition in the bond. AIA's official commentary and comparison explains the change from the 1984 form.

Address a surety's failure to act through the right procedure

Section 6 provides an additional demand and seven-day period when the surety has not proceeded with reasonable promptness under Section 5. A denial or a disputed payment offer is treated differently. Identify the surety's response before assuming the same demand procedure applies in every situation.

Calendar the time for proceedings separately

Section 11 generally measures its two-year period from the earliest of the listed events: a declaration of contractor default, the contractor ceasing work, or the surety's refusal or failure to perform. Review the complete clause and applicable law rather than counting only from the most recent denial letter.

Keep a complete record

Preserve the signed bond, contract, amendments, default notices, delivery receipts, payment ledger and communications with the surety. Before arranging completion work, assess how the proposed action affects the surety's contractual options and your rights.

Kushnick Pallaci PLLC handles construction contract and surety disputes. For a different issue—unpaid labor or materials—see our payment-bond claim guidance.

General information only. Bond language, governing law and project facts control.

AIA A312–2010: Performance Bonds vs. Payment Bonds

Updated September 7, 2026. AIA A312–2010 includes two separate bonds. Before sending a claim, confirm which bond you have and who it protects.

Performance bond

A performance bond addresses the contractor's obligation to complete the contracted work. The claimant must identify the obligee, the contractor, the surety, and the events and notices that trigger the surety's duties. A demand for completion is not interchangeable with an unpaid subcontractor's payment claim.

Payment bond

A payment bond addresses qualifying claims for labor and materials. Check the claimant definition, contract tier, required notice, supporting information and time to bring proceedings. Do not apply the performance bond's deadlines to the payment bond.

Two bonds require separate execution

AIA's instructions for A312–2010 explain that each bond must be completed and signed separately. Mixing the cover and signature pages can create a serious problem. The 2010 forms replaced the 1984 edition, not a 1983 edition.

Organize the claim before a deadline approaches

• Obtain the complete signed bond, incorporated contract and amendments.
• Confirm the parties' correct legal names and notice addresses.
• Prepare the work and payment chronology with supporting documents.
• Calendar notices, cure periods and the time to sue separately.

Kushnick Pallaci PLLC assists with New York payment-bond claims and construction contract disputes. See the companion article on A312 performance-bond notice requirements.

General information only. The actual bond, its edition, amendments and governing law must be reviewed.

Interpreting Surety Bonds: Conditions, Notice and the Bond Edition

Historical case note — October 6, 2011.

In East 49th Street Development II, LLC v. Prestige Air & Design, LLC, the Kings County Supreme Court examined the parties' rights under performance and payment bonds issued for a construction project.

The performance-bond claim failed because the claimant did not comply with the specific conditions that triggered the surety's obligations under that bond. The court considered who sent notice, what the notice said, the sequence of default and termination, and the treatment of the remaining contract balance.

The court also addressed whether project owners could assert payment-bond rights through subrogation. Voluntary payments to subcontractors and expenses associated with bonding liens presented different issues. The decision should not be read as a general rule that an owner is an ordinary unpaid-labor claimant under every payment bond.

Why the bond edition matters

This case involved bond language from a project contracted in 2007. Later forms have different language. In particular, A312–2010's treatment of the Section 3.1 notice should not be confused with a waiver of all triggering conditions. See our updated A312 performance-bond discussion.

Kushnick Pallaci PLLC assists with construction and surety disputes and payment-bond claims. Call (631) 752-7100 for a review of the signed bond and claim history.

Clarified September 7, 2026. Historical case summary; not a complete review of later case law or advice about a particular bond.

Mount Vernon v. Nova: The Court of Appeals on a Surety’s Diversion Defense

Reviewed September 7, 2026.

The 2010 appellate decision discussed in the original article was affirmed by the Court of Appeals in Mount Vernon City School District v. Nova Casualty Co., 19 NY3d 28 (2012). The surety remained liable under its performance bond after the contractor defaulted.

At the contractor's request, the school district had transferred approximately $214,000 of earned contract funds to the Department of Labor. The surety argued that the transfer improperly diverted funds and discharged its obligation. The Court did not decide whether that transfer violated the Lien Law. The nonperforming surety lacked standing as a subrogated trust beneficiary, and it failed to establish the material alteration or actual prejudice needed for its discharge theory.

Do not treat the decision as permission to divert funds

The ruling addresses this surety's defenses on a particular record. Owners and contractors still need to evaluate trust-fund restrictions and payment instructions before redirecting project money.

The Court also distinguished completion expenses from attorney fees incurred suing the surety: the bond did not unmistakably authorize recovery of the latter. Review the actual bond language before assuming that litigation fees are recoverable.

Kushnick Pallaci PLLC assists clients throughout New York with performance-bond and surety disputes. Contact 631-752-7100 or vtp@kushnicklaw.com.

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400 15th Street: Performance Bonds, Termination and Recoverable Damages

Reviewed September 7, 2026.

400 15th Street, LLC v. Promo-Pro, Ltd., 28 Misc 3d 1233(A) (Sup Ct, Kings County 2010), concerned a troubled condominium project, excavation damage to adjoining property and a claim against a performance surety. The earlier article described the dispute without explaining the result.

The court permitted the owner’s conversion of a termination for convenience to one for cause on the particular reservation, notice and lack-of-reliance record. It nevertheless granted summary judgment dismissing the claim against the surety because no compensable damages under the bond had been shown.

The completion contract cost less than the remaining original contract balance. The claimed adjoining-property repair costs fell outside this performance bond’s coverage, and consequential losses were barred by the contract’s waiver. The ruling was specific to the bond, contract and claimed losses; it did not decide that every performance bond excludes all delay or repair costs.

Coordinate contract, bond and insurance claims

Before terminating or hiring a replacement, examine default and notice requirements, cure rights, the surety’s options, remaining funds and damage limitations. Give appropriate notice to insurers as well. A performance bond and liability insurance protect against different risks, and one should not be treated as a substitute for the other.

Kushnick Pallaci PLLC assists clients throughout New York with performance bond and surety disputes. Contact 631-752-7100 or vtp@kushnicklaw.com.

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Construction Bonds Explained: Payment, Performance, Bid and Lien Bonds

Reviewed September 7, 2026.

Construction bonds serve different purposes. Obtain the executed instrument and identify the principal, surety, protected parties, covered contract and claim conditions before relying on one.

• Payment bonds protect eligible unpaid labor or material claimants. Coverage and notice requirements depend on the bond and governing law; they do not automatically protect every contractual tier or eliminate all lien rights.
• Performance bonds address the contractor's covered default. Notice, owner performance, termination and the surety's contractual options may matter. A surety does not necessarily have to hire a replacement contractor immediately.
• Bid bonds secure specified bidding obligations, commonly execution of the awarded contract and furnishing required bonds. The solicitation determines when they are required.
• Maintenance or warranty bonds address specified post-completion obligations for the period and conditions stated in the bond.
• Lien-discharge bonds substitute security for a lien when the governing statutory requirements are met. Under Lien Law § 19(4), the private-improvement undertaking is generally 110% of the lien and must be filed and served as prescribed. The bond amount differs from the premium charged to obtain it.

A bond is not a guarantee of immediate payment. Preserve notices and enforcement deadlines while investigating the underlying claim.

Kushnick Pallaci PLLC assists clients throughout New York with construction surety and bond disputes. Contact 631-752-7100 or vtp@kushnicklaw.com.

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