Bidding and Contracts Flashcards
What is an PAYMENT BOND and LABOR AND MATERIAL PAYMENT BOND?
Guarantees the owner that subcontractors and suppliers will be paid by the contractor (principal). The owner is the obligee; the “beneficiaries” of the bond are the subcontractors. Both the obligee and the beneficiaries may sue on the bond. An owner benefits indirectly from a payment bond in that the subcontractors and suppliers are assured of payment and will continue performance. If the principal fails to pay the subcontractors or suppliers, they may collect from the principal or surety under the payment bond, up to the penal sum of the bond.
What is a BID BOND?
A bond that is issued as part of a bid (from the surety to the owner) to guarantee:
1. The contractor will enter the contract at the agreed price.
2. That the bidder will provide performance and labor and material payment bond to guarantee the work will be carried out.
Surety company pays of contractor fails.
What is a COMPLETION BOND
A bond obtained by the contractor or owner that guarantees the project will be completed FREE OF LIENS.
What is a PERFORMANCE BOND?
A performance bond is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. A job requiring a payment & performance bond will usually require a bid bond, to bid the job.
What is a CERTIFIED CHECK in the bidding process?
Occasionally used in lieu of a bid bond but the principal is the same. If the bidder fails to enter the contract the owner can use the certified check at bid security to pay for expenses associated with contracting with another party.
What is SURETY?
THE PARTY THAT ISSUES THE BOND. A surety or surety bond is a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults. The person or company providing this promise is also known as a “surety” or as a “guarantor”.
What is a BOND
A guarantee. The bonding company is like a cosigner on a bank loan.
Who is the PRINCIPAL in a bond agreement?
The contractor
What is PRIVITY?
Toe parties to a contract are not liable to a third party. Protects architect and contractor from suing each other.
What comprises the CONTRACT DOCUMENTS?
- The Owner-Contractor Agreement
- The General Conditions of the contract (if any)
- The drawings
- The specifications
- Addenda issued prior to the execution of the contract.
What are four types of MODIFICATIONs?
- Change Order
- Construction Change Director
- Minor Change in Work (issued by architect)
- Written Amendment to the contract signed by both parties.
