No, THIS picture: (True story) The bonded contractor is a long established masonry contractor working as a sub. They got on a sizable contract with a big GC. The work was their normal stuff – a thin brick system on the exterior of the building.
There were frequent schedule delays and the substrate was unacceptable resulting in a work stoppage for nearly two months.
The GC started to correct the substate, but without an agreed / revised schedule, they filed a performance claim on the bond.
The mason’s attorney was confident they were not in default and would succeed in mediation. However, upon review of the contract, the surety’s claim department wanted to settle quickly and paid out 6 figures.
What’s wrong with this picture? How could this bad situation have been prevented?
Can you always trust the contract and bond forms of a “big GC” to be fair to all parties? Maybe not. We suspect that the mason did not have his attorney review the contract in advance.
What about the surety? They are a party to this obligation. On a significant project their due diligence should include a review of the proposed contract. THAT would have been the time to request adjustments – or walk away from a bad situation.
To make matters worse, the surety wants to settle quickly. What would have been the outcome if they stood firm? We’ll never know. But the contractor ends up with a net loss on his record forever – very unfortunate situation.
With over 45 years as a surety only carrier, we know how to support our agents and contractors, before, during and after bond issuance. “Experience matters!”
FIA Surety / First Indemnity of America Insurance Company, a Palomar Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417
A Carrier Providing A Rated, T-Listed Bonds in all States!