Conditional construction bonds: checklist for calling on the surety - triggers, evidence, procedure, risks, variations, expiry and defences, and distinctions from on-demand bonds
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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 of the contractor’s duties under the building contract, the surety owes a primary obligation—i.e. it is an on demand bond...
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Web page updated on 20/05/2026
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