Contract Bonds, a form of Surety Bonds, essentially act as guarantees for a given contract amongst a principal, an obligee and a surety. They are frequently required of construction contractors before a project commences.
Common Types of Contract Bonds
Some of the most commonly sought Contract Bonds include:
- Payment Bonds, which guarantee that all specified laborers, subcontractors and suppliers of a given project will receive compensation from the contractor.
- Performance Bonds, which provide owners with financial protection in case a contractor does not properly follow the Terms and Conditions that were established in the initial contract.
- Bid Bonds, which ensure that the bid was submitted with honest intentions. It also affirms that the contractor will approach the contract with the price that was determined by the bid, and supply Payment and Performance Bonds accordingly.
- Maintenance Bonds, which protect against deficient materials or workmanship for a specified time period following the completion of a project. These bonds sometimes include a promise of successful operations or a similar obligation.
- Labor & Materials Bonds, which cover the expense of all services, labor, equipment and materials if the contractor does not recompense them as outlined in the contract’s Terms and Conditions.
The quick and effectual acquisition of Contract Bonds can make a significant difference on the overall timeline of a project. Bond specialists can provide your firm with practical, cost-efficient solutions to your specific surety needs.