In Part 1 of our article, we introduced you to three surety bonds claims we often see as Jacksonville construction lawyers. In this last part, we share how these claims hurt contractor business and ways they can be avoided.
Benefit of Surety Bonds
Surety bonds are a valuable tool in the construction industry because they provide financial security and assurance that contractors will perform the work and compensate laborers, suppliers, and subcontractors as agreed in the construction contract. Other advantages of surety bonds include:
- Surety companies screen contractors before bonding them
- Contractors are more likely to fulfill contractual obligations
- Bonds protect subcontractors
- Bonds increase project opportunities for contractors
- The surety offers financial and technical assistance to contractors
Bond Claims Hurt Contractor Business
Although the surety will pay for the claims, the contractor will have to reimburse the surety. Failing to honor the bond with the surety, leads to a damaged reputation which makes it difficult to get bonded again. Not only that, contractors will be leaving a trail of disgruntled owners, subcontractors, material suppliers, and laborers.
The Key to Avoiding Claims
Avoid bond claims at all costs. Some of this can happen before a project begins. First, hire a competent Bradenton construction lawyer to draft a contract. Poorly written contracts lead to many disputes. Second, hire the right people. Never get into a business relationship with unlicensed contractors and always partner with reputable professionals. Third, make communication a priority. Communicating throughout the entire project in progress, this helps to highlight inefficiencies as the project moves along. Fourth, document everything. In case a dispute arises, your documentation serves as evidence in case things escalate. Last, find a reputable surety and cooperate in the event that a discrepancy occurs. Work with the surety for solutions for settlement outside of the courtroom.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.