Contract Bonds

  • Bid Bonds
    • Ensures contractor has submitted bid in good faith
    • Contractor intends to enter into contract at price bid
    • Contractor will provide required performance and payment bonds
    • Discourages unrealistic bids
    • If contractor is awarded contract and fails to enter into the agreement, the surety may be required to pay the difference between the awarded bid and the next lowest bid or pay the bond penalty.

  • Performance and Material Payment Bonds
    • Assures the owner or obligee that the contractor is capable & qualified to perform the contract
    • Protects the owner from financial loss if the contractor fails to perform the contract in accordance with its terms and conditions.
    • Generally includes a maintenance period to cover corrections of defects from faulty materials or workmanship for at least one year.
    • For longer periods a separate maintenance bond may have to be obtained

  • Supply Bonds
    • Guarantees performace of contract to furnish supplies or materials

  • Subdivision Bonds
    • Guarantees to obligee (usually City, County or State) that the contractor will finance and construct certain improvements such as streets, sidewalks, curbs, gutters & sewer & drainage systems.