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Insurer (sometimes called the Guarantor)
is the contractor who undertakes the services under the contract
is the party who receives the services and will receive payment under the bond if the Contractor fails to perform
Surety: The insurer (also referred to as Guarantor). The party who will make payment should the contractor fail to meet their contractual obligations.
Contractor: The contractor who undertakes the services under the contract.
Beneficiary: The party who receives the services and the payment under the performance bond should the contractor fail to perform.
A Construction Performance Bond is a guarantee, typically with a value of 10% of the contract price (though this may vary in some cases). It is intended to shield the employer/beneficiary from any losses and/or damages incurred as a result of the contractor's inability to fulfill its contractual obligations.
They are a protective measure in the form of a written guarantee which pays for the direct loss or damage suffered by a third party when a contractor fails to meet their obligations.
As well as Construction Performance Bonds, we can also arrange:
These bonds guarantee that a local authority or water company will be provided with a road, footpath, street lighting, or sewer system that meets their standards.
An advance payment bond is a guarantee, supplied by the party receiving an advance payment, to the party advancing the payment. It provides that the advanced sum will be returned if the agreement under which the advance was made cannot be fulfilled.
An employer could hold up to 5% of the contract value for a period of up to 12 months. The main contractor or sub-contractor then must wait for the funds to be returned at the end of the making good of defect period and this can affect cash flow. A retention bond will provide the employer with the same level of comfort as the retention. The contractor/ sub contractor has the real benefit of retaining the cash in their account.
Planning your next UK construction project? If have any questions or would like to arrange a bond, get in touch with our performance bonds team.
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