Don’t Release Payment Bond Rights for Claims Accruing Prior to the Date of the Release

When you execute waivers and releases in exchange for payment, do not…I repeat do not…release payment bond rights for claims such as change orders requests, delay, lost productivity, acceleration, etc., that accrued prior to the date of the release.  For instance, if you have submitted change order requests and have delay related damages as of 1/1/16, do not…I repeat do not…enter into a waiver and release in exchange for a payment where you waive your rights for claims through 1/31/16.  If you do, then you are waiving and releasing your claims.  The best thing to do is to take exceptions to claims that you have and identify such claims in the release–either identify them generally or specifically so that you are reserving your right to pursue such claims down the road.

In a case where a subcontractor sued a Miller Act payment bond surety, the court held that the subcontractor waived and released delay-related damages against the surety through a set date by virtue of the subcontractor executing waivers and releases in exchange for progress payments.  Although the subcontractor did not intend to release such claims, it nevertheless did so by executing unambiguous releases.  The subcontractor should have excepted the delay-related claims it wanted to reserve and pursue against either the prime contractor or Miller Act payment bond surety.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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