Making a Claim Under a Performance Bond?

Making a claim under a Performance Bond?

Performance Bond, Make a claim under a Performance Bond, Surety Bonds, Construction Surety Bonds

Making a Claim Under a Performance Bond can be tough if you don´t know in what circumstances you can make a claim, when the Surety will not respond or what documents you will need. This article will guide you through the process.

When you can do a claim under a Performance Bond:

There are three conditions of precedent for a Surety acting under a Performance Bond:

  1. The Obligee must have declared the Principal to be in default
  2. The contractor must be in default
  3.  The Obligee must have fulfilled their obligations

When a Surety likely will NOT respond:

  1.  When there has been no declaration of default as there is no justification for the Surety to act in this situation.
  2. When the Surety is not convinced that the contractor is in default. The situation often arises where a contractor refuses to do certain work they feel is not within the scope of the contract, and the Obligee believes that it is. This is a dispute which should be resolved via form mediators, arbitrators or if need be, the Courts.
  3. When the Obligee has not fulfilled the contractual obligations.                                       Eg. when the Obligee has failed to make payments, contractually due.
  4. When the Obligee has acted in a manner prejudicial to the Surety.                                   Eg. When the 3 conditions precedent to invoking the performance bond had been fulfilled,  however where an Obligee has made payments in advance of work having been completed and there is no provision in the contract for such payments. 

Documentation Required in the Case of Default

The following is the typical information that must be submitted to the Surety when making a claim under the Performance Bond:

  • A complete copy of the contract with the Principal
  • Copies of Change Orders
  • Copies of all progress billings
  • Summary of all payments made including the date of each payment
  • Up-to-date summary of the contract accounting between the Obligee and Principal
  • Evidence of termination of the contract and/or the declaration of default due to a prescribed breach
  • Copies of any claims for a lien or written notices of claims received
  • Any other documents establishing the validity of the claim
  • Detailed explanation of the grounds upon the contractor was declared to be in default.

Need a Performance Bond? Have Questions?

Call our Surety Bonding Specialists at 1-877-213-4545 or email us surety@bondsurety.ca.

This entry was posted in Performance Bond, Surety Bonding and tagged , , , . Bookmark the permalink.

Leave a Reply