Kennedys
9 Experts
11 Contributions by Kennedys
PRACTICE NOTES
Introduction
The ABI Model Form of Guarantee Bond first appeared in 1995, with a revision in 2002 to add a reference to the Contracts (Rights of Third Parties) Act 1999. A copy can be found here: ABI Model Form of Guarantee Bond. An explanatory guide accompanies the form. According to the ABI’s explanatory guide, the Model Form emerged after an extensive consultation with government and local authority advisers, commercial users, bodies from the construction and engineering sectors, leading construction firms and insurers, in order to address the House of Lords’ criticism of outdated bond wordings in the Trafalgar House case. The guide also sets out the objectives of the Model Form in greater depth and includes commentary on the drafting. In essence, the objective was to deliver a concise, short-form conditional bond wording, written in plain, contemporary language, intended to achieve a fair
Construction
PRACTICE NOTES
An advance payment bond is a specific type of performance bond, almost always issued as an ‘on demand’ instrument. See Practice Notes: Performance bonds—construction projects and On demand performance bonds—construction projects. This Practice Note considers:
the nature of advance payment bonds
why they are used in the construction sector
the key features of the wording used in an advance payment bond
Why are advance payment bonds used?
Under a standard building contract, the usual payment regime is that the contractor receives instalments as each stage of the works is completed, following inspection, measurement and certification by the contract administrator. In essence, sums are paid in arrears for work already performed.
There are occasions when an advance is made to the contractor, for instance to fund mobilisation activities, or to enable orders to be placed for the long-term manufacture and delivery of steel or other
Construction
PRACTICE NOTES
Introduction
This Practice Note aims to:
analyse the character and features of the on demand performance bond;
outline the principal indicators and key factors for deciding whether a performance bond should be treated as an on demand instrument rather than a 'conditional' guarantee or bond
For an overview of performance bonds, see Practice Note: Performance bonds—construction projects. For guidance on making a call under a bond, see Checklist: Calling on an on demand bond—checklist...
Construction
PRACTICE NOTES
A retention bond is a specific form of performance bond, most often provided as an ‘on demand’ instrument. This Practice Note considers:
the nature of retention bonds
why they are used in the construction industry
the key features to address in the bond wording
For a guide to performance bonds generally, see Practice Note: Performance bonds—construction projects.
Why are retention bonds used?
In typical building contracts, payments owed to the contractor are subject to retention: a pre-agreed percentage of each instalment is held back by the employer (the ‘retention’). When the works reach practical completion, an agreed share of that sum is released to the contractor, with the remainder paid at final completion/after making good defects.
Half of the retention is commonly released at practical completion
The balance is released on final
Construction
PRACTICE NOTES
Practice Note
This Practice Note explores what performance bonds are, the reasons they are sought, and how they sit within the standard documentation package typically required for a construction project. It further considers practical matters pertinent to negotiating and preparing such bonds. For assistance with making a demand under a bond, refer to Checklists: Calling on a conditional bond—checklist and Calling on an on demand bond—checklist for guidance...
Construction
PRECEDENTS
Retention bond Schedule
Bond number [ insert ]
Dated:
Parties
The Employer: [ insert ] incorporated in [ England and Wales ] (Company Number [ insert ]) with its registered office at [ insert ].
The Contractor: [ insert ] incorporated in [ England and Wales ] (Company Number [ insert ]) with its registered office at [ insert ].
The Surety: [ insert ] incorporated in [ England and Wales ] (Company Number [ insert ]) with its registered office at [ insert ].
(A) The Building Contract: the agreement dated [ insert ] between the Employer and the Contractor for the construction of [ insert ] (the “Works”).
(B) Retention: the sum to which the Employer is, or (but for the issue of this Bond) would be, entitled to withhold by way of retention from any amount payable to the
Construction
PRECEDENTS
SCHEDULE
Bond Number [ insert ]
Dated:
Parties
The Employer: [ insert ], company registered in [ England and Wales ] (Company Number [ insert ]), whose registered office is at [ insert ]
The Contractor: [ insert ], company registered in [ England and Wales ] (Company Number [ insert ]), whose registered office is at [ insert ]
The Surety: [ insert ], company registered in [ England and Wales ] (Company Number [ insert ]), whose registered office is at [ insert ]
The Building Contract: An agreement dated [ insert ] between the Employer and the Contractor for the construction of [ insert ] (the “Works”)
Maximum Bond Amount: The total sum of £[ insert ]
Expiry Date: [ The date of practical completion/making good defects of the Works in accordance with the Building Contract ]
Construction
PRECEDENTS
SCHEDULE
Bond Number [ insert ]
Dated:
Parties
The Employer: [ insert ] incorporated in [ England and Wales ] (Company Number [ insert ]) whose registered office is situated at [ insert ].
The Contractor: [ insert ] incorporated in [ England and Wales ] (Company Number: [ insert ]) whose registered office is located at [ insert ].
The Surety: [ insert ] incorporated in [ England and Wales ] (Company Number [ insert ]) whose registered office is at [ insert ].
The Building Contract: The agreement dated [ insert ] between the Employer and the Contractor for the construction of [ insert ] (the “Works”).
The Advance Payment: £[ insert ] to be paid by the Employer to the Contractor pursuant to clause [ insert ] of the Building Contract.
Maximum Bond Amount: The
Construction
CHECKLISTS
This checklist outlines matters to weigh up when preparing and agreeing an advance payment bond for a construction project. See also Practice Note: Advance payment bonds.
Parties
Where a party has its registered office outside England and Wales, it may need to nominate a service address within England and Wales.
Consider carefully before accepting a surety located outside the UK and, where relevant, verify the surety is properly authorised to issue bonds in the UK.
Always include company registration numbers so companies can be identified in the future.
The relevant contract
Set out the full particulars of the building contract and the works to which the advance payment bond applies, as appropriate...
Construction
CHECKLISTS
This checklist outlines key considerations when preparing and finalising an on-demand bond for a construction project. For additional guidance on bonds within the construction sector, refer to Practice Notes: Performance bonds—construction projects and On demand performance bonds—construction projects for further detail.
Parties
Where a party’s registered office lies outside England and Wales, it may have to nominate an address for service within England and Wales and comply accordingly. Be especially cautious before agreeing to a surety located outside the UK and, where relevant, confirm the surety is properly authorised to issue bonds in the UK. Always include company registration numbers so companies can be identified later...
Construction
CHECKLISTS
This Checklist
This Checklist highlights key matters to weigh up when preparing and finalising a retention bond for a construction scheme. For additional guidance on retention bonds, see Practice Note: Retention bonds.
Parties
A party whose registered office is outside England and Wales may need to nominate an address for service within England and Wales.
Consider carefully before accepting a surety located beyond the UK and, where relevant, confirm the surety is properly authorised to issue bonds in the UK.
Always include company registration numbers to enable future identification of the companies.
...
Construction
1 Contributions by Kennedys Experts
PRACTICE NOTES
This Practice Note offers guidance on applying limitation periods to insurance and reinsurance claims. It addresses how to determine when a cause of action arises and what follows once a limitation period has lapsed. It also explains routes to extend time, including the use of standstill agreements. In addition, it examines limitation periods and other key deadlines in special situations, such as contribution claims...
Introduction
In England and Wales, the Limitation Act 1980 (LA 1980) sets the time limits for specific claims. See Practice Note: Limitation-the principal limitation periods for a summary of that statute and how it has been read by the courts. Claims involving insurers and reinsurers face the same time bars, yet features of insurance and reinsurance contracts, and London market practice more broadly, have generated limitation questions addressed here...
This Practice Note covers:
Pinpointing accrual of the cause of action in
Insurance & Reinsurance
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