A surety bond is a promise to pay one party (the obligee) a certain amount if a second party (the principal) fails to meet some obligations, such as fulfilling the terms of a contract.
The surety bond protects the obligee against losses resulting from the principal’s failure to meet the obligation. It is a contract among at least three parties: 1) The obligee – the party who is the recipient of an obligation ; 2) The principal – the primary party who will be performing the contractual obligations , and; 3) The Surety – who assures the oblige that the principal can perform the task.
Types of Cover
Bidder’s Bond – Undertakes to guarantee that the successful bidder, within a specified period from the date of receipt of the Notice of Award, shall:
a. Enter into contract with the Obligee.
b. Furnish a Performance Bond for the faithful and complete prosecution of the work specified in the
A bid bond shall answer for the: (1) cost to conduct another bidding; and (2) amount difference between the winning bid and next lowest complying bid.
Performance Bond – Guarantees the construction and completion of a project in accordance with the approved plans, specifications, terms and conditions of the contract.
A performance bond shall: (1) answer for the cost of delay in the completion of the project; and (2) pay for the additional cost to complete the project. The additional cost of completion is equivalent to the difference between the contract cost to complete the project under the new contractor and the cost of completing the project under the old contractor.
Surety Bond (Downpayment) – It is also known as DOWNPAYMENT or ADVANCE PAYMENT Bond. It guarantees the recoupment or repayment of the unliquidated portion of the downpayment made by the Obligee to the Contractor.
Surety Bond (Guarantee) – It is also known as WARRANTY Bond. It is a pre-condition before the Obligee will release the retention money to the Principal. It guarantees the correction and repair of hidden defects in the workmanship and materials used by the Principal in the project, found or becoming evident within one year from the date of certificate of acceptance of the project.
In order for us to provide a QUOTE, we need to review the following documents:
- Principal Contract – This is to determine the nature of undertaking we are going to guarantee.
- Latest Audited Financial Statements filed with the BIR
- Completed and signed Bond Application Form
In order for us to ISSUE the requested bond, the following documents must likewise be submitted:
- Completed and signed Co-Signer’s Statement
- Copy of the Articles of Incorporation, Articles of Partnership and DTI Registration, whichever is applicable.
- Copy of Board Resolution authorizing the Signing Director/Officer to bind the Applicant
- Copy of two (2) Government Issued ID’s of the Signing Director/Officer
In orde for us to RELEASE the requested bond, the following must be satisfied:
- Payment of the premium due
- Completed and signed indemnity Agreement
- Submission of the completed and signed Indemnity Agreement