A contract guarantee bond provides an alternative form of financial guarantee to support construction related contracts.
There are many different types of bond to suit the numerous different financial obligations that can be placed on contractors or subcontractors as part of their business. We can explain them all and find the perfect solution for your business.
Types of bonds include:
- Performance bonds: A financial guarantee linked to completion of a project. These can be arranged on an individual or agreed limit/facility basis
- Development bonds: A guarantee that the planning conditions as set out for the specific development are met.
- Tax warehouse bonds: These bonds act as security to ensure that Revenue & Customs receives payment for duties and taxes on goods held which are dutiable.
- Retention bonds: An alternative to your main contractor withholding a percentage of the contract value
- Road and sewer bonds: These bonds guarantee the completion of roads and sewers to enable them to be adopted by the relevant authority (e.g. Sections 38,104,106 & 278 agreements)
- Advance payment bonds: A guarantee against deposits in advance of receipt of goods or services if a contract cannot be fulfilled
- 10-year warranties: Providing your clients with protection against latent defects. Can be extended to 12 years for contracts under seal.
Why use Performance Bonds?
Many contractors and subcontractors rely on their bank to provide construction bonds and financial guarantees. Unfortunately, banks generally require real assets as security or reduce the contractors’ banking facilities in return for surety provision. This can lead to reduced working capital and restrict the ability to secure new contracts.
A contract guarantee bond will still be subject to certain terms and conditions; however it will afford contractors rate certainty at tender stage and save time administratively, allowing cost to be passed to the beneficiary quickly and accurately.
We've proven experience in the construction industry, and the contractual guarantees required.