Is A Performance Bond The Same Thing As A Surety Contract?

Sara

Other claims may include legal fees but like delay damages, they cannot be automatically claimed unless parties have included it in the contract. For more information on claims, can learn more about this here.   Enforcement Of A Surety Contract One of the most common claims under a performance bond is the contractor defaulting in the middle of the project. This prevents the project from being completed. In this case, the cosigner also has the following options. First, they may decide to fund the contractor in order to complete the project. The second, on the other hand, is to search for a replacement that is acceptable to the project owner. A third option is to take over the project and finish it by hiring other replacements. Fourth, they may pay the contractor the penal amount agreed upon. Lastly, they may also do nothing and let the project owner find someone else to finish the job. Beyond anything else, a surety contract is entered into to make sure that a project is seen all the way to completion, with assurances to the owner that the contractor they hire will be capable of doing so. Surety companies have the most to risk in such agreements, which is why they have to do their research on the contractor before providing them the performance bond. Still, unfortunate circumstances might occur that cause delays or worse, the inability of the contractor to finish the project completely. In these cases, the performance bond, a type of surety contract, allows the project owner to recover some costs or damages they incurred.