Bonds/Surety

Contract Bonds

Bid Bond

The bid bond accompanies the tender, and guarantees the owner that if the contractor is “the low bidder,” the contractor will honour that bid, sign a contract to do the work, and provide any further bonding that’s required to fulfill the contract. If the contractor backs out, he or she must compensate the owner for the difference between his or her bid and the next lowest bid. If the contractor doesn’t compensate the owner, the bonding company must pay out under the bid bond.

Surety Letter (Consent of Surety)

A tender often calls for a consent of surety (surety letter) from the bonding company to accompany the bid bond. The consent of surety guarantees that the bonding company will provide the bonds specified to complete the contract.

Performance Bonds

A performance bond guarantees the owner that the contractor will perform the contract work. If the contractor does not, the bonding company must make arrangements to complete the project or pay out the bond penalty.

Labour & Material Payment Bond

A labour and material payment bond ensures that suppliers of labour and material used on the project and covered by the bond will be paid.

Commercial Surety Bonds Fidelity Bonds