Area of Law: Construction Law
Answer # 1985
Bid BondsRegion: Ontario Answer # 1985
A construction project that requires a Performance Bond will usually require a Bid Bond first. When a contractor is awarded the winning bid, a Performance Bond will then be required as security that the job will be completed.
A Bid Bond is a type of deposit provided by the contractor, as the bidder, to the project owner. It guarantees that the winning contractor will fulfill all of the responsibilities set out in the terms and conditions of the bid, including the agreed price. Bid bonds are an alternative to cash or certified cheque deposits, and are purchased through a Surety company. If the contractor does not meet all expectations in the bid, the Surety will compensate the project owner.
Bid Bonds are also used to help prevent contractors from submitting negligible or impractical low bids to win a project. Bid bonds are purchased through licensed insurance brokers, who in turn obtain the bond from a licensed insurance / surety company.
For more information about Bid Bonds, or to purchase a bond, contact Ai Surety Bonding.
You now haveoptions: