Amendments to ABI Model Form of Guarantee Bond Introduction The ABI Model Form of Guarantee Bond was first published in 1995 and was updated (in 2002) to incorporate reference to the Contracts (Rights of Third Parties) Act 1999. A copy is available here: ABI Model Form of Guarantee Bond The ABI explanatory guide states the ABI Model Form was published: 'following a lengthy period of consultation with government and local authority advisors, commercial users, construction and engineering industry bodies, major construction companies and insurers, to respond to the criticisms of archaic bond wordings made by the House of Lords in the case of Trafalgar House…' The explanatory guide also provides more detail of the aims of the Model Form, together with commentary on the text. In short, the aim was to provide a short form conditional bond wording, in clear, modern language that is intended to strike a fair balance between safeguarding the respective interests of the employer and the contractor. The hope and intention was that the ABI Model Form might become an industry standard model form of conditional performance bond. This has been partially achieved as it has been commonly adopted as a starting point, but is often subject to bespoke amendment, reflecting particular requirements of the parties. This Practice Note identifies areas which are commonly made the subject of amendment. For more background on performance
Performance bonds—construction projects This Practice Note examines the nature of performance bonds, why they are required and where they fit into the suite of documentation commonly required for any construction project. The Practice Note also addresses practical issues relevant to the negotiation and drafting of bonds. For guidance on making a call under a bond, see Checklists: Calling on a conditional bond—checklist and Calling on an on demand bond—checklist. The basic structure of a performance bond arrangement A performance bond is a contract whereby: • in relation to a building contract entered into by a building contractor and its appointing employer, ie the beneficiary • a third party ('the surety’) accepts liability for the performance of the contractor under the building contract (to the extent of the obligations described in the performance bond) If the surety is required to make a payment to the employer under the performance bond, the surety is likely to have common law rights to reimbursement from the contractor, but this is usually confirmed by way of a written indemnity agreement, entered into by the contractor in favour of the surety either as consideration for the surety granting the specific performance bond in favour of the employer, or in relation to any general bonding facility provided by the surety to the contractor. The structure of these arrangements is illustrated in figure 1 below. The function
Construction Glossary—A data-ln-csis="391375" data-ln-lnis="56C2-3Y71-F186-J46K-00000-00">A B C D E F G H I J K L M N O P Q R S T U V W X Y Z ABI Model Form of Guarantee Bond Form of performance guarantee bond produced by the Association of British Insurers (ABI) and commonly used in relation to construction projects, although it is often amended. See Practice Note: Amendments to ABI Model Form of Guarantee Bond. Acceleration Acceleration in construction law is generally understood to mean taking measures to speed up the works in order to complete them earlier than would otherwise be the case. See Practice Note: Acceleration of construction works, Precedent: Acceleration Agreement and Clause: Acceleration clause. ACE See Association for Consultancy and Engineering (ACE) below. Activity schedule List of activities the contractor
Discover our 3 Practice Notes on ABI Model Form of Guarantee Bond
This week's edition of Construction weekly highlights includes a Commercial Court case clarifying the distinction between guarantees and indemnities and examining the effect of a claim of equitable set-off (Brown-Forman Beverages Europe v Bacardi UK), a Commercial Court case related to forum non conveniens in relation to contribution proceedings (Samsung Electronics v LG Display Co Ltd), a new procurement policy note on the government’s carbon reduction plans, the publication of five main FIDIC contracts in the Chinese language and a response from the government on changes to the Architects Act 1997.
This week's edition of Construction weekly highlights includes a case in which the court construed a bond based on the ABI Model Form (Yuanda v Multiplex), a ruling in which the court gave guidance on the difference between single joint experts and testing houses (Blackpool Borough Council v Volkerfitzpatrick) and the announcement of a new Judge in Charge of the Technology and Construction Court (TCC).
This week’s edition of Banking and Finance weekly highlights includes: (1) ICMA guide to IBORs transition in the bond market (2) Update to the LMA Facility Agreements, and (3) Minister endorses Law Commission’s recommendations for electronic execution.
This week's edition of Dispute Resolution weekly highlights includes: analysis of a number of key DR developments and judicial decisions, including those of the Court of Appeal in Allen v Dodd (inducing a breach of contract), FM Capital Partners Ltd v Marino (restitution), Cowley v L W Carlisle & Co Ltd (strike out) and Canada Goose (injunctions against persons unknown); dates for your diary; details of our most recently published content (including Q&As); and other information of interest to general dispute resolution practitioners.
Construction analysis: The Technology and Construction Court held that a bond, based on the ABI Model Form of Guarantee Bond, was a performance bond and not an on demand bond. It also held that an adjudicator’s decision (as to the sub-contractor’s liability to the contractor for delay damages) would be sufficient to establish liability to pay under the bond.
This week's edition of Construction weekly highlights includes the postponement of VAT reverse charging until October 2020, a ruling of the Inner House of the Scottish Court of Session on the applicable prescription (limitation) period under a collateral warranty (British Overseas Bank v Stewart Milne) and various developments relating to the prorogation of Parliament.
Construction analysis: The court made declarations concerning the liability of the defendant surety to the claimant employer under the terms of a performance bond based on the ABI Model Form. The court held that the contractor’s insolvency was enough to trigger the bond (due to a bespoke amendment), and that in any event the contractor had been in breach of the construction contract (which incorporated the JCT conditions) by failing to pay the amount due to the employer following insolvency as ascertained under the contract.
Read the latest 7 News articles on ABI Model Form of Guarantee Bond
Speed up all aspects of your legal work with tools that help you to work faster and smarter. Win cases, close deals and grow your business–all whilst saving time and reducing risk.
**Trials are provided to all LexisPSL and LexisLibrary content, excluding Practice Compliance, Practice Management and Risk and Compliance, subscription packages are tailored to your specific needs. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
"We couldn't do as good a job as we do without it. LexisNexis gives us the security and confidence that we are best serving our clients because the information we are working on is the most accurate we can get"
Access all documents on ABI Model Form of Guarantee Bond
0330 161 1234