Performance bonds are widely used in the construction industry
as a means of protecting employers against non-performance or
financial default by the contractor.
If such circumstances arise, it is important that an employer
can make an enforceable claim for payment under the bond to secure
release of funds which may be required to complete works on the
project. In a recent Irish case, the court took a new approach to
the interpretation of a form of wording widely used in performance
bonds and dismissed the employer's application to enforce the
bond, noting that the employer had first to exhaust the dispute
resolution procedures under the building contract to crystallise
the amount to which the employer was entitled.
