How to Ensure that You Are Doing It Right With Your Surety Bond

surety bond - What is the definition of a surety bond - girl writing

What is the definition of a surety bond?

A surety bond is also known as a bail bond. A surety bond is an agreement between three parties that guarantees the fulfillment of an obligation. The primary signers to the contract are the guarantor (also called an obligee) and the principal. The third party involved in this type of agreement is known as the surety company, which acts as guarantor for the guarantor or principal. So long as all parties adhere to their promises, then no one will incur costs, but if there is any violation then penalties may be assessed.

In a surety bond, is it acceptable to utilize plug numbers?

The reason that Plug Numbers are generally not acceptable is because of the lack of specificity they allow in regard to the transactions they represent. Surety Bonds, by their nature, are contracts involving large amounts of money and the details involved should be clear. 

For example, if you have a surety bond written on 2 houses with each house having its own plug number (not uncommon), then our staff shouldn’t need to look at how many houses that particular bond is securing before being able to determine what kind of transaction has occurred. It would be preferable for them to read “2 houses” instead so as to avoid confusion which might result in processing delays. Generally speaking, plug numbers are not acceptable for large transactions or when multiple transactions are involved.

Plug numbers are generally used in lieu of writing the full information when the original bond has already been processed by staff and there is no need to make any changes. Only in this situation should plug numbers be considered since they do not provide any additional specificity that might be useful if the bond was being written for something new.

What happens if subcontractors aren’t paid by building companies?

As a result, the department says it will work with these subcontractors to resolve their personal affairs. However, they emphasize that none of the unfortunate events described by the press are able to compromise public safety in any way. Authorities say they are completely satisfied with all security measures taken at federal buildings. 

The Federal Government calls on anyone having information about non-payment of subcontractors or malpractice anywhere in relation to federal building projects to contact them directly so action can be taken against perpetrators.

The immediate repercussions of non-payment to subcontractors and what authorities are doing to make sure this doesn’t happen again. The article goes on to say that none of these unfortunate events described by the press will compromise public safety in any way but does not make any direct reference to complaints made and how they would like anyone who has information about malpractice or non-payment of subcontractors to contact them directly. There is no direct reference or recognition of issues raised by anonymous sources regarding security measures taken around federal buildings.

What does the term “reimbursement” imply?

The word “reimbursement” implies that repayment is made for an expense previously incurred. When the term is used in a contract, it may create an obligation to repay expenses if certain conditions are met.

To illustrate, assume that the following provision appears in a license agreement between Company A and Company B:

Company B shall reimburse Company A for any costs or fees paid by Company A to independent contractors in connection with the performance of work required pursuant to this Agreement.

For example, assume that under this provision Company A must pay $10,000 in legal fees to outside counsel for drafting the parties’ invention assignment agreements. If/when everything goes according to plan, then there would be no reimbursement payment obligation because all compensation would be paid for in-house work under the license. 

However, if Company A later decides that it wants to hire outside counsel or patent agents to help prosecute its patents, there would be a reimbursement payment obligation because all patent prosecution costs would likely be reimbursed by Company B the licensee.

When building a self-performing building, what kind of insurance is required?

When you are building your house, one of the most important things you look for is security. Security in terms of protection from natural calamities and dangers, thus making sure that your property is safe with all safety measures being incorporated since the beginning. But have you ever thought about insurance? Have you ever thought about what kind of insurance is required while breaking ground for a self-performing building? Yes, there’s something like that too!

Let’s start off by knowing what self-performing buildings mean. A self-performing building consists of buildings that can perform independently without any human assistance or intervention; they are supposed to be more advanced than normal buildings because these types of buildings will be able to perform automatically i.e., they will not need any human assistance or intervention for their running. Such buildings are a great relief if you think about it. 

But this brings us back to our original question: What kind of insurance is required while breaking ground for a self-performing building? Here’s what we suggest:

  • Evacuation Insurance 
  • Flood Insurance
  • Fire Insurance 
  • Crowd Control Insurance 
  • Security Insurance

So when you are breaking ground for a self-performing building or planning to buy one soon, think about these things and take care of them by purchasing the right insurance plan suitable for your need!

Check us out to know more about surety bonds!

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