Bonds and surety

Contract bonds

Bid Bond

A Bid Bond is a guarantee by the surety company that the contractor’s bid is bona fide.

The Bid Bond accompanies a tender and guarantees the owner that if the contractor is awarded the contract, the contractor will honour the bid, sign a contract to do the work and provide any further bonding that’s required to fulfill the contract.

Consent of Surety (Surety Letter)

A tender often calls for a Consent of Surety or a Letter of Surety to accompany the bid bond. The Consent of Surety guarantees that the bonding company will provide the specified bonds to secure the contract if the contractor is the successful bidder.

Labour and Material Payment Bond

A Labour and Material Payment Bond guarantees to the owner that the contractor will pay for labour and materials used in executing the contract.

Performance Bonds

A Performance Bond guarantees performance of the contracted work, up to the face value of the bond. If the contractor defaults on his obligations, the owner will look to the surety for completion of the project.