Surety Bonds In Construction Projects
There are quite a few things that can be a part of a Michigan construction project. One of these things are surety bonds. A surety bond generally is obtained from a surety company by a contractor in a construction project. It serves as sort of insurance policy for the owner of the construction project (and possibly other parties) to address the issue of potential future default on the construction contract by the contractor. If a surety bond is in place and the contractor defaults in a way covered by the bond, the surety company that provided the bond is obligated to provide relief to address the default.
Sometimes, a contractor is required to obtain a surety bond in order to bid on a construction project or work on a construction project.
There are different types of surety bonds that can end up arising in relation to a construction project. Four of the main such types are: performance bonds, payment bonds, bid bonds and ancillary bonds. These bond types differ in the types of contractor defaults they are aimed at addressing and the type of relief they are aimed at providing in the event of a default.
Sometimes, surety-bond-related disputes come up during a construction project. These sorts of disputes can arise in relation to any type of construction-related surety bond. As is the case with any type of construction dispute, what ultimately ends up happening in a surety bond dispute can have substantial effects on all of the parties involved. Thus, when a party is involved in such a dispute, it can be vital for them to understand what options they have and what they can do to protect their interests and their rights. Construction law attorneys can provide guidance to businesses and individuals that are involved in disputes regarding surety bonds.
Source: U.S. Small Business Administration, "Surety Bonds: The Basics," Accessed April 10, 2015