Payment and Performance Bonds

The party most likely to need a performance and payment bond is the general contractor, just like in the example provided above. Since the general contractor has overall responsibility for the completion of the project, it’s only logical that this would be the person who should take on the assurances associated with the payment and performance bond. This guarantees that the hiring organization doesn’t get held responsible for reimbursing subcontractors, suppliers and other laborers on the project. It also ensures that those same subcontractors, suppliers and laborers will not suffer financial loss should the general contractor default on the terms of his agreement.

There are several reasons why you might want to get bonded as a professional contractor who hires out your services to consumers or larger organizations. In some cases, getting bonded is an actual condition of eligibility, meaning that you cannot be considered for a job or project unless you are legally bonded. Many large employers and agencies now require bonding as one of their qualifying conditions, and non-bonded candidates are not even considered. Some surety bonds are required by states for professionals and contractors to operate within the jurisdiction of the state. License and permit bonds are a good example of this kind of bonding, and they usually require bonded contractors to have gone through some level of training as assurance that they are qualified to offer professional services to consumers and hiring companies. Once you meet the specific requirements to be bonded and licensed, your next step is to complete an application for a bond. There are several agencies across the country that specialize in bonds, so you should be able to find one that will serve you if you spend some time looking. Make sure that they can provide the bond that you will need for your business. We can write them all - auto dealer, DMV, RV, motorcycle dealer, and used car dealer. Although there are some differences between these bonds, they all essentially serve the same purpose: to protect customers from fraud. If you as a dealer break your bond’s terms, the wronged party can make a claim against the bond to obtain compensation.

Almost every industry in this country makes use of surety bonds, and it’s not hard to understand why. Since surety bonds protect one or more parties in a work agreement, they can serve as a powerful motivation for that work to be completed, to comply with any relevant laws or regulations, to be high-quality, professional work, and to be done within the specified time limit. The construction industry is one of the biggest users of surety bonding because it is so important that subcontractors and contractors complete their work according to the terms agreed upon, so that the overall project does not suffer, or fall behind schedule.