Surety Bonds
Contractors (particularly civil, construction and engineering contractors) who have won a contract are usually required to provide some form of security that represents a percentage of the total contract price.
Surety bonds have been introduced as an option to a bank guarantee that has generally been provided by the contractor’s bank to cater for this need. A surety bond provides tangible security to the contract owner that the contractor will perform in accordance with the terms and conditions of the contract. The issuer of the surety bond is committed to pay the contract owner should default occur by the contractor. In the event of a claim under a surety bond, the surety will seek recovery from the contractor.
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