Your client performed the contract. However, as a result of interference by a major vendor, the project is thrown off track and now there’s a performance bond claim.
The surety has indicated that the file is “on hold” pending resolution of the claim. Your client engaged in attorney but no immediate resolution is in sight.
In the meantime the contractor is becoming desperate to acquire new work and is threatening to go to a new bonding source for bid bonds (maybe by posting collateral?) If the client disengages with the incumbent surety, their claims department may decide to conclude the matter by paying the claim and closing the file. That would be the worst outcome:
- Your client will have a paid bond claim permanently on their record
- You lose a customer
- The claims department will subrogate against your contractor on a claim that possibly should not have been paid.
Surety Challenge Question: How could this outcome have been avoided? Add your comments below!
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