Fichas
Bonds
Fichas del conjunto (16)
- 1What are the main sources of guarantee that can be sought in construction?- Bond
- Parent Company Guarantee - 2What is a performance bond?A contract of guarantee whereby the contractor will pay damages should they not 'perform' the contract
- 3What is an example of something that you could call in the performance bond for?- Cost associated with finding a new contractor should the existing contractor not perform the contract
- 4What form must a bond be in?- In writing
- Will contain a duration and a financial limit - 5Who normally provides a bond?A bank or insurance company - the cost of the bond will be added to the contract sum
- 6What are the different types of bond?- On demand bond (unconditional) - where the bond can be called upon with no need for proof etc. (not generally used)
- Conditional bond - will only be paid out with breach of contract and evidence etc. - 7What are the disadvantages of bonds?- Can negatively affect a contractors cash flow
- 8What is the standard value of a performance bond?10% of the contract sum
- 9How can the employer call for payment?They have to prove that the contractor has defaulted under their obligations and that loss had been suffered.
- 10If the contractor is insolvent, how will the client get the money?- Guarantor will not pay out until practical completion of the project so the total amount of loss can be calculated
- 11What is a parent company guarantee?Where the performance of the contractor is underwritten by a parent company
- 12What are the differences between a parent company guarantee and a performance bond?- Protection - performance bond is from a third party, while parent company guarantee depends on strength of parent.
- Cost - PCG is free, PB is not.
- Cover - PB does not guarantee the completion of a project, but PCG does (however no use if Parent Company is bust)
- Duration - PB expires at PC, PCG can be for 12 years.
- Enforcement - notoriously hard to get a pay out under PB. - 13What is a retention bond?A bond where retention amount is paid at the start of the project, not deducted from each interim payment. Should be the same as if retention was deducted normally i.e. (3/5% of contract sum).
Not used often. - 14What is the purpose of a materials off site bond?Covers the employer against loss or damaged of materials already paid for before delivery to site.
- 15What are the arguments against providing bonds?- Shouldn't really be needed if the tenderer selection process ensure only reliable, capable contractors are used.
- Unnecessary premium added to contract sum (unlikely to be called upon) - 16Where might bonds be appropriate?- If the contractor is new or unapproved
- To protect the interests of a 'one off' developer
- Where it is thought appropriate with the risks of the project
Información
- Descripción
- Level 3 Contract practice Fichas sobre Bonds, creado por Evie Dwyer el 10/12/2017.
- Creado por
- Evie Dwyer · dic 2017
- Actualizado
- 11 dic 2017
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