Payment & Performance Bond Claims

A performance bond is a bond issued by a surety that protects the project owner (the obligee) in the event the contractor (the principal) defaults on its obligations under the contract. When a contractor fails to adequately perform and does not correct deficient performance, the surety may be called upon to correct the deficiencies, and in some cases, to complete the project. Both the contractor and the surety may be held liable for damages for failure to do so. In this situation, the owner can make a claim against the contractor and against the bond in order to recover damages caused by the contractor’s breach of contract.

A payment bond ensures that a contractor’s material suppliers and subcontractors are paid according to contract. Payment bonds are required on public projects where mechanic's liens are not allowed. A payment bond is a type of contract bond that is often packaged with a performance bond by many sureties. The need for a performance bond and payment bond often arises out of a contractor successfully winning a public job opportunity and posting a bid bond in the process.

Pursuing or defending claims on performance and payment bonds often involve complex procedural and substantive legal issues. The attorneys at Hunt Ortmann have dealt with numerous payment and performance bond claims and understand how to properly address and resolve such claims.