Performance bond meaning

This checklist sets out the key issues to consider when reviewing a PCG on behalf of a contractor who is being asked to provide a PCG. The terms 'contractor' and 'employer' are used, but the same principles also extend to arrangements between a contractor and a sub-contractor, or between an employer/contractor and a consultant. As PCGs are commonly bespoke, the particular context should be taken into account when assessing a PCG. For a fuller discussion of these points, see Practice Note: Parent company guarantees (PCGs) in construction—drafting and negotiation issues. Is the contractor obliged under the Building Contract to provide a PCG? If not, there is no requirement for the contractor to deliver one. Nevertheless, a contractor might still agree to give a PCG to reassure the employer and to create or sustain a good working relationship. Do the contractor’s internal policies allow the issue of PCGs, and is any approval necessary? Many businesses would opt to give a PCG rather than a performance bond,...

Introduction When contracting in a business-to-business setting, aim to secure as much contractual protection as your negotiating position allows. This checklist explains how key clauses can control risk and safeguard businesses-whether you are a supplier or a customer-and how to negotiate them to extract the greatest benefit... Key provisions General comments Payment Payment security Confirm the financial stability of the party you are buying from or selling to by carrying out a credit check. Decide if a payment safeguard is needed, for example: a parent company guarantee a letter of credit or a bank performance bond Customer Will the customer be able to honour its payment commitments? Consider obtaining credit insurance, and continue to run credit checks throughout the life of the contract to manage overall exposure to financial risk... Supplier Is the supplier financially capable of meeting your supply demands... Payment terms...

This checklist highlights the main points to weigh up before making a call (claim) on a conditional bond, also referred to as a default bond. Any call is directed to the surety, typically an insurer or surety firm. Here, we assume a contractor has furnished the bond to its employer; the same approach generally applies where, for instance, a contractor seeks to call a performance bond issued by its sub-contractor. Is the bond on demand or conditional? The drafting of the bond ought to clarify this, though the label it uses is not conclusive. Consider: Who stands as surety? On demand bonds are commonly supported by banks, while conditional bonds are typically supported by an insurer or surety company. Is the contractor named as a party? For an on demand bond, the contractor need not be a party; for a conditional bond, they may well be. What is the extent of the surety’s liability? Where the surety’s duties under the bond operate independently...

In this issue: Building safety Assignment Payment Planning in construction Product safety Daily and weekly news alerts New and updated content Construction trackers Building safety BSR introduces external remediation improvement plan The BSR has unveiled an external remediation improvement plan to speed up higher-risk building (HRB) safety works across England, improving the pace of essential remediation. The plan introduces several measures, including: (1) a new external remediation multidisciplinary team (MDT), expanding on BSR’s Innovation Unit to streamline communication and processing through account managers and a single contact; (2) a recruitment drive to grow regulatory lead capacity, cutting caseloads from about 25 to roughly 10, to benefit both applicants and BSR processes; (3) the application of ‘approval with requirements’ to allow projects to commence safely while resolving technical issues and (4) updated external remediation guidance to help industry tackle key challenges within the building control process for existing buildings. Proportionality in building control—a government...

In this issue: Adjudication Litigation Arbitration Building safety Procurement in Construction Construction industry news Daily and weekly news alerts New and updated content Construction trackers Adjudication Joint ventures on construction projects—who can adjudicate? (Darchem Engineering v Bouygues Travaux) The TCC declined to summarily enforce an adjudicator’s award in favour of a company that formed one half of an unincorporated joint venture. The JV, not the individual company, had been appointed as sub-contractor under a sub-contract for works at a nuclear facility. The court determined the company alone was not a party to that sub-contract, meaning the adjudicator lacked jurisdiction. The ruling underscores the need to assess carefully the legal ramifications of delivering projects through an unincorporated joint venture. See News Analysis: Joint ventures on construction projects—who can adjudicate? (Darchem Engineering v Bouygues Travaux). Litigation Defence strike out—still leaves a hill to climb in proving the claim in the absence of the defendant and...

In this issue: Brexit UK, EU and international regulators and bodies Accountability, culture and societal governance Prudential rules Stability of the financial system Financial crime and sanctions Conduct standards Complaints, redress and claims handling Investigations, enforcement and disciplinary action Benchmark regulation and IBOR transition Capital markets regulation PRIIPs (Packaged Retail and Insurance-based Investment Products) Derivatives regulation Sustainable finance and ESG Banks and mutuals Funds and asset management MiFID II Insurance regulation Personal pensions and stakeholder products regulation Payment services and systems Fintech and cryptoassets EEA Agreement Annex IX (Financial Services) Financial Services Enforcement Database Daily and weekly news alerts Intraday alerts New and updated content Dates for your diary New Q&As New Q&As Brexit — HMT outlines the next stage of the Smarter Regulatory Framework. HM Treasury (HMT) has issued a policy paper describing the upcoming...

A glossary of frequently used terms and phrases in Scottish Private Client law, with the closest England and Wales equivalents (where applicable) and links to helpful websites Ab intestato Meaning From someone who dies without a will; describes property taken under the laws of intestate succession. Nearest English equivalent None Action of specific implement Meaning A court action seeking an order compelling a party to carry out a particular act. In Scotland there is no division between equitable and legal remedies, unlike England and Wales. Nearest English equivalent Specific performance (an equitable remedy for breach of contract that can be ordered alongside, or in place of, damages) Advance notice Meaning An entry in the relevant property register that protects the grantee of a deed intended for registration in the Land Register of Scotland. The protected period of 35 days begins on the day after registration....

Project documents This Practice Note offers an overview of several widely used agreements and papers in a PFI/PF2 scheme, though the precise suite adopted will turn on the particular project. In the 2018 Budget (delivered on 29 October 2018), the government stated that PF2 will not be used for new schemes (see News Analysis: Budget 2018—what does it mean for infrastructure and housebuilding?). That said, existing PFI and PF2 arrangements will remain in operation and, given the usual term of such projects, are expected to continue for many years... Project Agreement This is the core contract in any PFI arrangement. It records the full set of terms and conditions governing the relationship between the Authority and Project Co/SPV for the life of the project. Where Project Co/SPV is granted a concession (ie the exclusive right to supply/operate/exploit something to create third party revenue), the Project Agreement may be described as a concession agreement. Typically a substantial document, it is often divided into multiple sections for manageability. Under...

Overview This Practice Note outlines key characteristics of covenant loose and covenant lite financings and considers certain risks that investors in these facilities may encounter. It assumes a degree of familiarity with leveraged finance terminology and documentation. For introductory material on leveraged finance financial covenants, see Practice Note: Leveraged finance—financial covenants. For an introductory guide to acquisition finance, see Practice Note: Introductory guide to acquisition finance. The Glossary of acquisition finance terms and jargon may also be helpful... Terminology Traditional ‘covenanted’ facility European leveraged facility agreements have traditionally included a package of financial covenants designed to monitor the borrower‑group’s financial performance against a base case financial model. The full suite typically comprises the following covenants: Leverage — this is the ratio of the group’s total [net] indebtedness to its earnings before interest, tax, depreciation and amortisation ( EBITDA ). The leverage ratio gauges the group’s indebtedness against its ordinary operating profit; the higher the ratio, the more indebted the group and the greater...

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RECITALS Fifth Recital replaced: the Contractor has issued a master programme and a Schedule of Information Requirements Twelfth Recital replaced: the Contractor has inspected the Site, confirmed suitability, verified Employer’s Requirements where there is a CDP, and accepts full design responsibility ARTICLES Articles 5 and 6 extended to include the Dutyholder Regulations; Contract Sum covers Principal Contractor duties Arbitration deleted; new Article 10 gives precedence to the Schedule of Amendments; new Article 11 imposes compliance with Third Party Agreements and related liabilities CONTRACT PARTICULARS Arbitration entry removed; Rectification Period set to 12 months; fluctuations omitted; various entries on CDP insurance, bonds, and third party rights adjusted CONDITIONS Updated definitions (including Building Safety Regulator, HRB, Dutyholder Regulations, Practical Completion); arbitration references deleted Approvals do not dilute Contractor obligations; stricter CDP, materials and golden thread duties; enhanced programme, reporting and HRB assistance Strengthened IP, confidentiality, insurance, sub-contracting,...

DATE [ insert date ] Parties [ insert name ] of [ insert address ] [ incorporated in England and Wales, company registration number [ insert number ] ] (the ‘Surety’) [ insert name ] of [ insert address ] (the ‘Council’) Definitions 1980 Act • means the Highways Act 1980 Bond • this bond agreement for the Bond Sum Bond Sum • the amount of [ insert bond sum specified in the Highway Agreement or as agreed with the Council ] Default Notice • a written notice issued by the Council to the Surety under clause 5.2 of this Bond confirming that the Developer has not carried out and/or completed the Works in accordance with the Highway Agreement, and setting out the sum which, in the [ Proper Officer’s ] opinion, is needed to carry out and complete the Works in accordance with the Highways Agreement and/or to remedy any defect or default of...

An initial consideration at the outset is to ask why B wants a legal charge. Is it intended to ensure the works are completed? To enable B to do the works in default? Or is it about finance, ie does B seek security so that, if A fails to do the work, B will obtain monies (eg by selling A’s land) to cover the cost of the works required accordingly?...