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How do Construction Bonds work? A Construction Performance Bond is a tripartite agreement and is designed to offer some protection to the beneficiary in cases were the contractor fails to perform the contract. The reasons for such failure could be insolvency, default or any other actions as defined in the contract or bond wording. In the case of a dispute, the first action would be for the contractor/sub-contractor to remedy the issue, if that fails and a call is made on the bond the surety will investigate the matter, if the claim is valid the damages would be established and ascertained in accordance with the contract. |
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