Ensure that the Face of the Performance Bond Expressly Covers Delay Damages

If you are an obligee under a performance bond (meaning the performance bond is designed to benefit you) then you ideally want the bond to cover delay damages. In other words, you want the performance bond to cover delay damages caused by the bond-principal’s default.  For example, an owner (obligee) wants the contractor’s (bond-principal’s) performance bond to cover any delay-type damages caused by the contractor’s default.  And, a general contractor (obligee) wants a subcontractor’s (bond-principal’s) performance bond to cover delay-type damages caused by the subcontractor’s default.  Delay-type damages are a category of damages caused by a bond-principal’s default so it is imperative that the face of the performance bond expressly covers these damages.  Otherwise, there is an argument that the performance bond will not cover delay-type damages.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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