— SURETY

Main, Sub and EPC Contractors

Bid Bonds

This may be a requirement if you are bidding for a local government contract, for example. It represents a commitment, should your bid be successful, that you will carry out the work.

Who are they for? Contractors tendering for public works.

Performance Bonds

Performance bonds guarantee that the Bonded Principal will undertake and fulfil their contractual obligations agreed with the Beneficiary.

In the event of contractual default (usually via insolvency of the Principal), the Beneficiary will hold security in the form of the bond which will reimburse and pay out losses and damages up to the maximum bond amount.

Who are they for? Main Contractors, Sub-Contractors, Service Providers.

Retention Bonds

Retention monies are usually held by Beneficiaries as a form of security to ensure that any defects are made good by the contractor. Some retentions can be large sums, commonly up to 5% of the contract value, and these can be crucial to a contractor’s cash flow. In some cases, the Beneficiary will waive their contractual right to deduct retention monies from sums due to the contractor in exchange for security in the form of a retention bond. In the event of the contractor’s failure to rectify defects or their insolvency, the Beneficiary would be able to call under the retention bond to be reimbursed the retention monies that had been originally released.

Who are they for? Main Contractors and Sub-Contractors.

Warranty and Maintenance Bonds

Warranty & maintenance bonds provide security to the Beneficiary for any defective works or faulty materials which may be discovered post project handover, during the maintenance period. Maintenance bonds will either be incorporated into the contractual performance bond that will usually reduce by 50% on handover or they will be issued as a standalone bond which replaces the contractual performance bond as a lesser sum.