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Surety Bonds remain significant in a range of industries but the Construction industry is the most popular. From Performance to Payment Bonds, there are several Construction Bonds that are used to ensure the completion of the construction project whilst protecting all parties involved financially. In this article, we will be discussing everything to do with…
A Surety Bond is a legal obligation involving a three-party agreement between; the principal (contractor), the employer (obligee/project owner), and the surety/guarantor. Surety Bonds protect the employer from financial loss in the event of default regarding contractual obligations, as detailed in the bond wording and contract, that are not fulfilled. In this case, the Surety…
Do Performance Bonds Have An Expiration Date? Performance Bonds typically expire when the period of time specified in the bond comes to an end, or upon practical completion of the works. They can also be valid until any goods with defects are made. How long a Performance Bond lasts is usually based on the wording…
How is A Performance Bond Calculated? Understanding how performance bonds are calculated is crucial for contractors and project owners alike. This is because Performance Bonds are significant in ensuring project completion and financial security. Performance Bonds offer protection to the project owner or obligee, typically by providing financial compensation in case the contractor or principal…
Do Performance Bonds Cover Warranty? When a contractor takes out a performance bond, they may assume that it covers their warranty, however, that isn’t the case. A performance bonds primary focus is on performance during the construction phase, it does not inherently cover post-completion warranty obligations unless specified. However, some performance bonds include warranty provisions,…
Who Issues Performance Bonds? Performance Bonds are usually issued by a financial institution such as a bank, insurance company, or a surety company as a form of financial guarantee and a form of security that contractors will meet their contractual obligations. This offers a level of protection against risks, ensuring financial protection. This article will…
What Is A Surety Bond? A surety bond is a legal agreement involving three parties; the principal (contractor), the employer (obligee), and the surety/guarantor. These bonds can provide financial protection for the employer in the event that the contractual obligations, as detailed in the bond wording and contract, are not fulfilled. This article will tell…
When Can I Release A Performance Bond? A performance bond is released when all the underlying covenants within the bond wording and associated contract are satisfied. This is usually when practical completion (PC) of the contract is achieved, or at the end of the making good of defects (MGOD) period. In this article we will…
How Long Does A Performance Bond Last? When taking out a performance bond, many contractors may wonder about their validity period, and when they expire. The duration of a performance bond varies and is greatly dependent on how long it takes the contractor to achieve practical completion or making good of defects. Some performance…
There are various types of performance bonds that you need to be aware of as a contractor, and not all of them will be suitable for the project you are completing. That is why knowing the types of performance bonds and their differences is important. The two main types of performance bonds are conditional bonds…
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