Contract Bonds

Owned by Daniel Akers (Unlicensed)
Last updated: Mar 06, 2024 by Maria Harreguy
3 min read

Overview:

There is a range of options in the Construction and Building industry available to protect Owners against the non-performance of a Contractor, in this case, your bussiness, including:

  • retention

  • liquidated damages

  • indemnity and set-off provisions

  • parent company or shareholder guarantees

  • performance bonds

  • bank guarantees.

Performance Bonds or Bank Guarantees are becoming more popular, than using Retentions.
This tab is used to store information about any contract bonds that are being held regarding this Contract. If your contract does not have any bonds, this tab can be ignored.

Release Dates

This is typically upon the completion of all the Contractor’s obligations (your obligations) under the contract. It is important that you have these dates present and have reminders so you can request your client to Release these bonds.

These bonds are your liabilities (as opposed to the bonds in Subcontracts, that are your subbies liabilities, and are protecting you from any non-preformance by them).

Screen Guide:

 

  • Type is the category of bond being held. Bond types are set up as Lookup options. Lookup type is 'ContractBondTypes'. Clicking on this field will open the bond editor - see below for more information.

  • Bond No is the number that the bond is being held under by the third party. This is manually typed during the creation of a New Bond.

  • Amount is the value of the bond being held.

  • Release Date is the intended release date of the bond being held. This can be updated if the situation changes.

  • Released is automatically ticked once the Released checkbox within the Bond has been ticked. It is independent of the Released Date. This indicates that the third party has released the bond back to your company.
    When ticked → Intended Release field changes to Actual Release.


Bond editor

 

Clicking + New Bond or clicking any existing bond will open the above editor.

  • Bond Number is the number that the bond is being held under by the third party. This is manually typed during the creation of a New Bond.

  • Bond Type is the category of bond being held. New types can be added from Lookups list screen. Lookup type is 'ContractBondTypes'. A typical one would be a Bank Guarantee or Performance Bond.

  • Posted Date is the date that the bond was posted to the third party.

  • Amount is the value of the bond being held.

  • Released is a checkbox that must be manually ticked. This indicates that the third party has released the bond back to your company. When ticked → Intended Release changes to Actual Release

  • Intended Release / Actual Release is the intended release date of the bond being held. This can be updated if the situation changes. When the Released checkbox is ticked, this field name changes from Intended Release to Actual Release, and at this stage, you can update the Actual Release Date to the date the Bond was released.

  • Description & Comments are for reference purposes in regards to the selected bond. Place whatever information your company needs to coordinate posting and releasing of this bond in these fields.

  • Attachments can be uploaded on each Bond entry.

 

Next Steps:

Once the bond is recorded, be sure to update information as soon as it becomes available to ensure that this record is always up to date. All contracts should be checked for bonds when the project comes to a close and ensure you request your client to release these bonds.



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