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What is a Payment Bond?
When to use a Payment Bond:
- You own a surety company.
- You're a project owner and want to make sure contractors and suppliers get paid.
- You're a contractor, subcontractor, or supplier starting a new project.
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Payment Bond
KNOW ALL PERSONS BY THESE PRESENTS:
THAT WHEREAS, , , , ( the Owner) has awarded to , , , (the Principal) a contract dated (the "Contract") for the Project, .
NOW, THEREFORE, we, the undersigned Principal and , , , as Surety, are held and firmly bound unto in the sum of for which payment is to be made. We bind ourselves, our heirs, executors, administrators, successors, and assigns, jointly and severally, firmly by these presents:
| 1. | Bond |
According to this Payment Bond, if Principal, or its heirs, executors, administrators, successors, or assigns approved by the Owner, or its subcontractors shall fail to pay any of the money due with respect to work or labor performed under the Contract, or for any amounts required to be deducted, withheld, and paid over to any state departments from the wages of employees of Principal and subcontractors with respect to such work and labor, the Surety will pay for the same in an amount not exceeding the sum specified in this bond.
2.Parties Bound
This bond shall inure to the benefit of any of the persons named in state civil code as to whom a right of action is given or their assigns in any suit brought upon this bond.
3.Modification
Surety, for value received, hereby expressly agrees that no extension of time, change, modification, alteration, or addition to the undertakings, covenants, terms, conditions, and agreements of the Contract, or to the work to be performed there under, shall in any way affect the obligation of this bond.
4.Waiver
| Surety does hereby waive notice of any such extension of time, change, modification, alteration, or addition to the undertakings, covenants, terms, conditions, and agreements of the Contract, or to the work to be performed there under. |
5.Third Party
Surety's obligations hereunder are independent of the obligations of any other surety for the payment of claims of laborers, mechanics, material suppliers, and other persons in connection with the Contract.
6.Attorneys' Fees
If any action at law or in equity is brought to enforce or interpret the provisions of this Bond, the prevailing party will be entitled to reasonable attorneys' fees in addition to any other relief to which that party may be entitled.
7. Notice
Correspondence or claims relating to this bond shall be sent to Surety or the Principal at the address set forth above.
8.Applicable Law
This Agreement shall be construed under and in accordance with the laws of , and all obligations of the parties created under this Agreement are performable in
9.Signatures
This Agreement shall be signed by on behalf of , and by on behalf of
IN WITNESS WHEREOF, we have hereunto set our hands this with the intent to be legally bound.
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Payment Bond FAQs
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When can I use the Payment Bond document?
You may use the Payment Bond document if:
- You own a surety company.
- You're a project owner and want to make sure contractors and suppliers get paid.
- You're a contractor, subcontractor, or supplier starting a new project.
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What is a payment performance bond?
A performance bond ensures that a contractor successfully completes a project. It is issued by a bonding company or bank and is used to protect the owner when the terms of a contract aren't successfully executed. If contractual obligations are not met, the surety company will pay the claim.
A payment bond is usually issued alongside a performance bond and guarantees that laborers, material suppliers, and contractors are paid according to the terms of the contract.
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How do I get a payment and performance bond?
Payment and performance bonds are issued by a surety bonds company. Surety issuers can be bond producers, general insurance companies, and speciality surety companies.
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What is a construction bond?
A construction bond ensures that any construction work being done is in accordance with the terms of the agreement. They also protect the project owner and contractor(s) against non-payment and project incompletion.
The parties to a construction bond are typically the project owner, surety company, and contractor(s).
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What is a bonding?
Bonding ensures that a customer is protected if anything goes wrong. In the event that the customer faces a problem, they can file a claim against the company. If the claim is valid, then the bond purchased by the company will cover the cost of the claim.
