When are bid bonds provided in the project process? - answer✔Calls for bids often require that
bid bonds be provided when bids are submitted.
What happens if the contractor refuses the contract after winning the bid? - answer✔Depending
on the terms of the call for tenders, and the terms of the bid bond, the contractor's liability for
refusing to contract with the owner may be limited to the amount of the bid bond.
What position will the surety be in in relation to the other parties? - answer✔The surety will
always be in at least as strong a position as the principal.
What defences can the surety rely on? - answer✔the surety will be able to rely on all defences
the principal would have against the obligee, and may have additional defences under the bid
bond, e.g., shorter limitation periods
What happens under a performance bond? - answer✔Under a performance bond, the surety
guarantees that the principal will perform its obligations
What is a performance bond used for? - answer✔Often used to guarantee performance under
construction contracts.
What is the typical value of a performance bond? - answer✔In the construction industry,
performance bonds are normally written in an amount equal to 50 percent of the value of the
contract.
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