Performance Bond

A performance bond, also known as a contract bond, is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor.A job requiring a payment and performance bond will usually require a bid bond, to bid the job. When the job is awarded to the winning bid, a payment and performance bond will then be required as a security to the job completion.For example, a contractor may cause a performance bond to be issued in favor of a client for whom the contractor is constructing a building.
Posts about Performance Bond
  • SURETIES DO NOT ISSUE BONDS RISK-FREE TO THE BOND-PRINCIPAL

    … If your construction company is bonded, then you have signed a General Agreement of Indemnity with your surety / bonding company. Stated another way, if a surety issued an obligee on behalf of your construction company, as the bond-principal, a payment or performance bond, then you have signed a General Agreement of Indemnity with your surety…

    Florida Construction Legal Updates- 13 readers -
  • HURDLES WITH TRIGGERING A SUBCONTRACTOR PERFORMANCE BOND

    … There have been a couple of decisions as of late, particularly in federal court, that have gone in favor of a performance bond surety and against a general contractor’s claim against a subcontractor’s performance bond. These decisions have been so unfavorable that they may be swaying certain internal decisions to move to subcontractor default…

    Florida Construction Legal Updates- 15 readers -
  • PROPERLY TRIGGER THE PERFORMANCE BOND

    … A performance bond is a valuable tool designed to guarantee the performance of the principal of the contract made part of the bond. But, it is only a valuable tool if the obligee (entity the bond is designed to benefit) understands that it needs to properly trigger the performance bond if it is looking to the bond (surety) to remedy and pay…

    Florida Construction Legal Updates- 16 readers -
  • IS PERFORMANCE BOND LIABLE FOR DELAY DAMAGES?

    … There is an argument that a performance bond is not liable for delay damages UNLESS the bond specifically allows for the recovery of such damages. Keep this in mind when requiring a performance bond so that the bond covers the associated risks (and damages) you contemplate when requiring the bond. This argument is supported by the Florida…

    Florida Construction Legal Updates- 11 readers -
  • DRAFTING THE BOND FORM, PARTICULARLY THE PERFORMANCE BOND FORM

    … Oftentimes, when it comes to payment and performance bonds (in particular) the bond forms are drafted by the obligee. For example, an owner (as the obligee) may draft the bond forms that it wants its general contractor’s surety to execute. And, a general contractor (as the obligee) may draft the bond form that it wants its subcontractors…

    Florida Construction Legal Updates- 11 readers -
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