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What a difference 12 months make! In the late spring of 2000, the news was the continued profitability of the surety business with expectations that, as long as the construction economy continued to grow, conditions in the surety market would continue to be favorable for most contractors. By the fourth quarter of last year, the [...]
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Bid Bonds on Federal Contracts – Just the Fax
Bid Bonds,Bonds,Federal Government Contracts,Surety
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Bidders on most sealed-bid federal contracts are required to furnish a bid guarantee along with their bids. The bid guarantee is usually provided in the form of a bid bond issued by a Treasury-listed surety company. The purpose of the bid bond is to guarantee the payment of liquidated damages to the government in the [...]
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Surety Fails to Pay on Bond for Default Termination
Default Termination,Federal Government Contracts,Performance B,Surety
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When the U.S. Government terminated a contractor for failure to perform in accordance with the contract provisions, the contractor’s surety asserted that the termination was wrongful and refused to pay on the performance bond. After much litigation it was held that the contractor was properly terminated. When the surety still did not pay on the [...]
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Surety Hit with Substantial Punitive Judgment
Performance,Punitive,Surety
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Sureties play a vital role in public construction projects. As a result, many states have enacted statutory guidelines regulating how insurance companies and sureties administer claims made on their policies or bonds. Massachusetts is one such state that has enacted a legislative framework under which sureties can face substantial punitive damages if they do not [...]
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A subcontractor worked on a project for five months without being paid and then sued the A/E for negligence, claiming that the A/E owed it a duty, as a third party beneficiary, to assure that the contractor maintained a payment bond or paid the subcontractor before being given his progress payments. Plaintiff, subcontractor, argued that [...]
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