BOND

BOND

This bond is to guarantee that the contractor will perform up to the specified terms and conditions of the contract failing which the principal is to recover the extent to which the expense has been made from a surety in this  case the insurer.

Requirements

• Memorandum of Association, form CO7 or Director’s list
• Certificate of Incorporation
• Letter of award of contract
• Tax clearance in the last three years
• Audited accounts in the last three years
• Evidence of past performance
• Signed and sealed corporate and personal indemnities
• Collateral securities
• Two passport photographs of two directors of the company
• Bank statement in the last three months.

(a)       Performance Bond

A performance bond is required by a principal from a contractor to guarantee the full and due performance of the contract according to plans and specifications

(b)       Bid/Tender Bond

This guarantees that if a contractor is successful in winning a contract on the basis of his tender, the contractor will be able to carry out the work.  The Bond requirement is to discourage unserious tender.  The bond is exercised by the owner if the contractor fails to accept the offer.

(c)       Advance Payment Bond

At the beginning of a contract, the contractor is paid between 60-70% of the contract to enable him mobilize his workmen and machineries to the site for effective takes off of the contract.

The bond is exercised by the principal if the contractor fails to mobilize, the principal would be able to recoup the amount paid from the insurer.

(d)       Retention Bonds.

Usually a certain percentage of the contract value is retained by the principal until the expiry of the maintenance period.  The principal can have this money released to them on production of this bond which states that the principal can exercise the bond if the contractor fails to honour his maintenance liabilities.  This type of bond will only be needed towards the end of the contract, either before or during the maintenance period.

It is our candid recommendation that this policy should have the following extensions.

• Transit from storage area to site
• Overtime, airfreight and emergency charges to speed up replacement work
• Consequences of faulty workmanship, defective materials or faulty design