February 22, 2012
Contract Bonds guarantee the contractor (principal) will perform the work and pay their suppliers, subcontractors, and laborers. Below are types of contract bonds and how to apply.
› Bid Bond
› Performance & Payment Bond
› Subdivision Bond
› Warranty Bond
› Right of Way Bond
› Supply Bond
› Forms
A big bond contains two guarantees if you are successful on a bid. First you will enter into the contract with the owner or prime contractor. Second you will provide a performance and payment bond for that contract. The surety will underwrite the bid bond on the assumption that you will be successful, and will base their primary consideration on whether they would be willing to issue the performance and payment bond.
A Performance and Payment Bond contains two guarantees. First is that you will perform your work according to the contract. Second is that you will pay your subcontractors and suppliers.
Commercial Bonds create a guarantee that one party (Principle) will perform an obligation to another party (Obligee). This guarantee is backed up by the Surety. This is then a three party agreement. The exact form of bonds can vary from one situation to the next. Forms are not standardized. The obligations can cover a broad range of industries and circumstances. It is important than an experienced bond agent review this obligation and offer the appropriate answer to this bonding requirement.