Bad Surety Bond Wording

Booby Trap Performance Bond

“The Surety, for cost obtained, hereby stipulates and consents that if the Contractor has been declared in default with the aid of the Obligee, and there was no uncontested failure, which has not been remedied or waived, of the Obligee to pay the Contractor as required under the Construction Contract: (i) The Surety shall promptly treatment the default… ”

Waaaa?! We examine this time and again to apprehend the consequences. Is this just another uninteresting bond shape, or is there a Booby Trap, an intricate effort to advantage a bonus over the surety?

Every bonding organisation has their personal popular Performance and Payment Bond paperwork. For us, we opt to use the AIA A-312 unmodified P&P bond. This is a properly balanced, broadly standard form. Whenever we acquire a special bond shape, we have to evaluation it carefully. Why did the obligee spend the money and time to devise this? There ought to be a few blessings – for them.

Last week we received an obligee’s obligatory bond form on a non-public agreement and a key word is stated above. Our patron is the GC / high contractor. Sometimes the specific bond forms are not too bad. Let’s choose apart this one. Maybe you will run into it some time.

This language may be very crucial because it issues the Obligee’s duty beneath the settlement. In order for the Obligee to be entitled to make a overall performance bond declare, they ought to satisfy their cease of the bargain, that is to PAY for the paintings. Is a bond declare for loss of performance affordable if the Obligee has failed to pay the contractor? Of direction now not! They cannot paintings at no cost