Greensboro Construction Bond
If you are a contractor that wants to work on government projects, it’s highly likely that you will need to be bonded in order to procure a government-funded contract. Surety bonds are one way that government agencies can protect their investment and subcontractors can ensure payment from the contractor.
A Greensboro construction bond gives financial commitment from the general contractor (known as the principal) to the owner (known as the obligee). This bond establishes that the owner will be compensated if the contractor fails to provide quality workmanship or fails to complete a project according to the expectations outlined in the employment contract.
Implementing a Greensboro Contractor Surety Bond
Although construction bonds can be extremely complex and the value of these bonds can greatly vary depending on the size of the project or the type of bond implemented, bonds are a necessary evil in government construction projects. It’s critical that construction professionals have a full understanding of the bond obligations in their contract. Here are some of the most common types of bonds utilized on construction projects:
Bid Bonds: When you submit your government bid proposal, you will need a bid bond to be in place. Bid bonds are designed to offer the owner protection and they also give the owner the option to pursue legal action against the contractor and the surety (the bonding agency) if the contractor fails to meet their end of the agreement. In other words, the bond is enforced if the contractor is awarded a bid, but never fulfilled their obligation to the bid.
Performance Bonds: After a contractor procures a project, they will want to have a performance bond in place to complete the work for the project. Performance bonds can actually be utilized by either the contractor or owner and are designed to ensure that the other contracting party fulfills their contractual obligations.
Payment Bonds: Considered an alternative to a mechanic’s lien (which cannot be performed on a government project), payment bonds ensure that all of the other workers on a project (subcontractors, laborers, suppliers) are guaranteed payment.
A Construction Law Firm That Excels in Bond Law
Bonds can impact projects in a variety of ways. For example, many contractors miss out on great opportunities during the bid process because they don’t have the necessary bid bond pre-approved. From ensuring your contract has performance bonds that protect you to filing a bond claim against an owner, it’s important to consult with a construction law firm that is intimately familiar with bond law and understands the nuances of surety bonds and how they impact construction projects.
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Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.