Kennedys

This Practice Note explains what an advance payment bond (sometimes referred to as an advance payment guarantee or advance stage payment) is and why they are used in the construction industry. It examines the key features of advance payment bonds (which are a form of advance payment security) and the other clauses which are typically seen, including duration of the bond and the maximum amount.

This Practice Note introduces the ABI Model Form of Guarantee Bond and explains why it was produced. It then examines the typical amendments which are made by lawyers.

This Practice Note examines the nature of on demand performance bonds in relation to construction projects. It identifies the key features which distinguish on-demand performance bonds from conditional performance bonds.

This Practice Note examines the nature of performance bonds and their use as financial security on construction projects. It looks at why building contracts commonly require contractors to provide a bond from a surety to the employer and where they fit into the documentation commonly required for a project. It covers the structure of a performance bond, the different types of bond and the differences between them. It also reviews key provisions which should be included for a performance bond to be effective, including the maximum amount of a bond, when it should expire and notice provisions.

This Practice Note examines the nature of retention bonds, what their purpose is and why they are used in the construction industry and the main clauses which are needed for a retention bond to be effective.

This Precedent is a standard advance payment bond for use where an advance payment is required on a construction project. The bond is written on an on demand basis and provides for the surety to repay to the employer the amount of the advance payment which has not been properly applied to the works in the event of a contractor breach or an insolvency. The bond contains a maximum bond amount, an expiry date and an ability for it to be assigned to a funder or to the party to whom the building contract is assigned.

This Precedent is a default or conditional performance bond to be given by a contractor to an employer as security on a construction project. Under the bond, the surety guarantees the contractor’s proper performance of its obligations under the building contract. The performance bond is drafted from a neutral position and provides for the surety to pay the employer in the event of such a breach by the contractor of its obligations or in the event of contractor insolvency.

This Precedent is an on demand, or unconditional, performance bond to be provided as security by the contractor to the employer in the context of a construction project. The surety is obliged to make payment on receipt of a demand from the employer stating that the contractor is in breach of its obligations under the building contract or is insolvent. The surety is obliged to pay the amount claimed by the employer under the performance bond upon demand without first seeking substantiation of the amount claimed.

This Precedent is a retention bond for use on a construction project under which the employer agrees not to withhold retention, and in return for which a surety agrees to guarantee the obligations of the contractor in the event of a default up to an amount which is equivalent to that which would have been withheld as retention under the building contract. It is drafted on an on demand basis.

This Checklist sets out points to consider when drafting and agreeing an advance payment bond for a construction project.

This Checklist sets out points to consider when drafting and agreeing a conditional bond for a construction project.

This Checklist sets out points to consider when drafting and agreeing an on demand bond for a construction project.

This Checklist sets out points to consider when drafting and agreeing a retention bond in respect of a construction project.