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Contractor's Bond Overview and Sample

The document discusses a contractor's bond, which is a surety bond issued by an insurance company or bank to guarantee a contractor satisfactorily completes a project and pays wages. It protects the client if the contractor fails to finish work or pay wages as expected. The bond also covers unpaid subcontractors, property damage, and lost materials. For the bond to be effective, the contract must specify the work and timeframe. Benefits include assured proper performance and wage payment without extra owner costs. Drawbacks are the surety may try to avoid paying by arguing the owner did not comply with bond terms or wants the cheapest solution, and the owner must prove losses.

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Boysie Ceth Garvez
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373 views3 pages

Contractor's Bond Overview and Sample

The document discusses a contractor's bond, which is a surety bond issued by an insurance company or bank to guarantee a contractor satisfactorily completes a project and pays wages. It protects the client if the contractor fails to finish work or pay wages as expected. The bond also covers unpaid subcontractors, property damage, and lost materials. For the bond to be effective, the contract must specify the work and timeframe. Benefits include assured proper performance and wage payment without extra owner costs. Drawbacks are the surety may try to avoid paying by arguing the owner did not comply with bond terms or wants the cheapest solution, and the owner must prove losses.

Uploaded by

Boysie Ceth Garvez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

GARVEZ, ANICETO E.

CONTRACTORS BOND
FORM NO. 70

Introduction

Is a surety bond, usually issued by an insurance company or a bank to


guarantee satisfactory completion of a project by a contractor.
Also used as guarantee or a security for the payment of wages of all the
laborers, in accordance to the Labor Code.
If a contractor fails to complete a job or pay wages as expected, the
agency that issued the bond will provide a pay out to compensate.
Generally for the benefit of the laborers, along with the pricipal.
Bonds provide financial protection in the event that the laborers are not
properly compasated for the contractorship .
It may also cover things like unpaid subcontractors, damage to the
property caused, and lost or stolen materials.
In order for a contractors bond to be effective, the contract must be
specific about the work to be done as well as the period of the
contractorship.

Benefits
The principal is assured of the proper performance of the contractorship
and the payment of wages of the laborrs.
The owner does not need to incur additional costs.

Drawbacks
The surety may try to establish that the owner did not comply with the
technical conditions of the bond to avoid paying the compensation.
The surety may opt that the owner has to settle for the least
expensive remedy to the problem.
The owner needs to quantify the losses suffered.
CONTRACTORS BOND

KNOW ALL MEN BY THESE PRESENT

Whereas, in the _____________, Philippines, on __________, I,


________________, Contractor, signed and executed a Building Contract with
________________, for the construction of a building for the said
_________________, the specifications, conditions, and details of which are
mentioned in said Contract.

Whereas, in order to guarantee the fulfillment of said Building Contract,


and to better secure the payment of wages of all laborers to be contracted by me
pursuant to said Building Contract, and pursuant to Act No. 3959, I hereby agree
to put up a bond as I hereby put out a bond in favor of __________________ in
the sum of __________________ Philippine currency;

WHEREFORE: We, __________________ of ______________, as


Principal and __________________ and _______________ unto the said
________________ in the sum of ________________, Philippine currency, for
the due and prompt payment of which we hereby bind ourselves;

And the condition of this bond is such that if the said Principal shall well
and truly perform his obligation under the said Building Contract and shall duly
and punctually pay or cause to be paid any and all amounts under and by virtue
of said contract, and more particularly those amounts or wages due to the
laborers contracted by the Principal in fulfillment of his obligation under the said
Building Contract, then this bond shall become null and void, and of no further
force or effect; OTHERWISE, the said bond shall remain in full force and effect
and shall be enforceable in the manner and form prescribed by law.

IN WITNESS WEHEREOF, we have hereunto set our hands at


_______________, Philippines, this ___ day of _________________, 20__.

_______________ _______________

_______________ _______________
(Signature of Principals and Sureties)

WITNESSES:

_______________ _______________
ACKNOWLEDGMENT

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