AIA has been an industry leader in providing form contracts to the construction industry for over 100 years. Every ten years their documents are revised to keep up with changes in the law.
In 2017, a significant amount of their documents were updated. One frequently used AIA contract form that underwent substantial change was the “General Conditions of the Contract for Construction.”
Insurance and Bond Exhibit
One of the areas that underwent significant change was Article 11, which covers insurance coverage and bonds. A majority of this section was transferred to an exhibit. The creation of the Insurance and Bond Exhibit gives the parties greater flexibility and the ability to tailor the document to their needs. It also identifies what is optional, vs. mandatory coverage. This exhibit can also be used for other agreements, outside of insurance coverage and bonds.
The language of Article 11 was changed in several important ways. The Contractor is not required to provide a Certificate of Insurance for instance. In the new version, a Contractor and an Owner are required to provide each other with notices of cancellation of coverage. Provisions were also added that protect the Contractor and subcontractors if the Owner doesn’t comply with the insurance requirements.
Payment
Inspired by the 2008 recession, AIA has revised the language that addresses the Owner’s ability to pay. The Contractor now has steps to follow if he does not receive assurances of payment.
Digital Communications
AIA has changed what is considered acceptable modes of communication. Digital communications are now allowed for sending notices between the parties. It is important to note, however, that any notices of claim must still be sent the traditional way (courier, personal service, certified mail).
Filing a Claim
The time frame for filing a claim has changed. Once the first decision and mediation is complete, a party can request that the other file a claim. Failure to do so within 60 days means both sides have waived their right to further arbitrate or litigate the issue.
Minimum Changes
The Contractor’s rights pertaining to change orders has been revised. If the Owner requests a small change, but the Contractor feels it will negatively impact the existing agreement (timing or price), he is not obligated to complete the change without a written change order.
These are just a few of the changes that have been made to the AIA documents. If you are planning on using these documents in the future and have questions, please contact me.