Indemnity Performance Bond vs. On-Demand Performance Bond

Performance bonds are an important feature in many construction contracts. In Tradesmen Pte Ltd v Ten-League Corporations Pte Ltd [2025] SGHC 114, the High Court made clear the distinction between an indemnity performance bond versus an on-demand performance bond.

The Background. Tradesmen Pte Ltd (the "Applicant") was engaged by Ten-League Corporations Pte Ltd (the "Respondent") for an additions and alterations project at Tuas (Judgment [1]).

The contract between the Applicant and the Respondent included, among others, a letter of acceptance as well as the Real Estate Developers' Association of Singapore Design and Build Conditions of Main Contract (4th Ed, 2022) (the "REDAS Conditions") (Judgment [4]), and the Applicant was required to provide a performance bond (the "PBond") pursuant to the terms of the contract (Judgment [1]).