Bonds in construction contracts are often a pain point for
Contractors. Especially in international construction projects they
are frequent and are used to protect in a way or another the
Employer from various breaches and non-performance of the
Contractor.
Construction bonds are however rather risky for the Contractor
especially if they are issued in the form of an on-demand
bond.
If you are a Contractor, read below to see:
A. what construction bonds are and how
they work;
B. 5 tips to reduce the risks connected
with them.
A. What Construction Bonds are and how they work
Very broadly, they are guarantees which allow the Employer to
recover damages or losses in case the Contractor fails to fulfil
its obligations. If used correctly, they are therefore a legitimate
instrument for the protection of the Employer.
