Create a bond

About this business activity

A bond protects the issuer of an advance payment, guarantees the contractor will meet their obligations, and provides a financial guarantee in case the contractor doesn't finish the work or meet quality standards.

Advance Payment Bond Letter

An advance payment bond is a legal document that guarantees payment in the event that a contractor defaults on a construction project. The bond is typically issued by a bank in the form of a letter, and it can be used for other types of commercial contracts, such as when a customer pays a supplier in advance for a piece of machinery or equipment.

What to watch out for

  • An on demand advance payment bond is typically issued by a bank in letter form.
  • The bond is primarily intended for use on a construction and engineering project, although it could be used or adapted for other commercial supply contracts.
  • The bond guarantees payment in the event that the customer defaults on the contract.
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    Relevant Contract Types

    πŸ–₯️ Advance payment bond

    A surety bond that is required by the Obligee (project owner) and provided by the Contractor as a guarantee that the Contractor will make all advance payments required by sub-tier contractors and suppliers in accordance with the terms of the subcontracts. In the event that the Contractor fails to make these payments, the Obligee can make a claim against the bond and receive compensation for any damages incurred.

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