Call Us Now: +912235624783 | Contact Us |

Contract Sureties

Surety bonds used for the Construction and infrastructure projects are called Contract Surety Bonds. The coverage is project specific and are usually required by law for government contracts and voluntarily by the private owners.

Bid Bond

It is a guarantee submitted to the project owner (Obligee) by the contractor along with the bid. Bid Bonds provide an assurance that the contractor will enter into the contract at the terms on the bid and provide the required performance guarantees. This helps prevent contractors from submitting bid and then backing out of the contract after being awarded the bid or changing the terms of the contract prior to the work getting underway.

Performance Guarantees

A performance bond ensures that the contractor performs the contract in accordance with its terms and conditions. In the event of the contractors failure to execute the contract in compliance with its terms and conditions, the obligee can declare the principal in default, terminate the contract and call on the surety to the extent of the penal sum under the bond.

Payment Bond

A payment bond acts as a guarantee to the sub-contractors and suppliers that the contractor will pay them for their services rendered or materials supplied for the project.

Advance Payment Bond

Advance Payment Guarantees are quite prevalent in the construction and the infrastructure industry. After the grant of the contract, the contractor may request for an advance to purchase any high value plant or materials that are specifically required for the project. The client may advance the payment subject to the submission of an advance payment guarantee equivalent to the amount of the advance being made. This secures the client to the extent of the advance payment made in the event of a default by the contractor.

Retention Bond

Retention is usually the amount held back from a payment made under a construction contract. It is usually represented by a percentage of the amount payable of each instalment. The retention money is held to ensure that the contractor performs the contract as per the agreed terms and conditions and is paid to the contractor either on the completion or at the end of a defect's liability period. A contractor may submit a retention bond instead of having a part of his payment withheld which will help him receive his entire payment while at the same time without any deduction while at the same time providing the project owner with a similar level of financial security to holding the retention money.