bonds - How to Protect your Contracting Company with Proper...

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How to Protect your Contracting Company with Proper Bonding It’s important to note that even the very famous contracting companies find themselves right in the middle of very bad disputes. When this disputes escalate, the affected company may face a bond claim. In most instances, most bonding companies will do their very best to ensure that their side is well guarded. It’s now the duty of the contacting company to rely on proper bonding to ensure it effectively safeguards itself. If you belong to the later, then this is how to protect your contracting company with proper bonding. What to do to survive the fight by Ben Williams Former heavyweight boxing champion Mike Tyson famously said, “Everybody has a plan until they get punched in the face.” This is as true in construction as it is in boxing. Even the best contractors can find themselves in the middle of disputes. Occasionally, these disputes escalate, and the contractor is presented with a bond claim. Depending on the size of the claim and the strength of the company, these claims can put contractors on the ropes and even knock them out of business. So, what can contractors do to protect themselves? Most projects involve either performance bond claims or payment bond claims. Generally speaking, a performance bond guarantees that the contractor will perform the obligations spelled out in the contract, while a payment bond guarantees that the contractor will pay subcontractors and suppliers. Each contract and bond form is a little different, but, generally, four events need to occur before the bond company will act on a bond claim. These include: The contractor has to be in default (breach of contract).
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