What Does It Mean To Be Bonded In The Construction Industry?
Throughout the years, the word bonded has been utilized in a wide variety of different manners. Although getting bonded out of jail is undoubtedly one way to utilize the word, being bonded isn’t always the result of something negative. In fact, construction contractors must get bonded, if they wish to accept projects and begin earning revenue, within Canada. Below, you’ll learn precisely what it means to be bonded.
In order to better familiarize yourself with the term, it is essential to look at its definition. Although the term has a handful of different meanings, the most common is that bonded means you’ve been fixed to something securely. When it comes to surety bonds, being bonded means that you’ve legally bound yourself to a contractor and guarantee that you’ll live up to your end of the arrangement. Of course, there are numerous different types of bonds, so the true meaning will vary depending on the type of bond in question.
As a contractor, you’ve likely familiarized yourself with the process of taking on a project. First, you’ll be required to obtain a bid bond. Upon obtaining this bond, you will actually be bonded to the agreement set out in the bid. In this sense, you’re bonded to the initial bid and also agree to the terms behind why you’ll need to obtain the required bonds, if you’re selected as the winner of the project. If you fail to do so, you will be forced to give up the bond amount.
Performance bonds are ultimately very much different and will bond the contractor to a handful of different agreements. One of the most important is the fact that this type of bond will force the contractor to guarantee that they’ll follow through with the project and deliver satisfactory results. This is just one of the agreements, which will be set in stone through a performance bond, but it is definitely one of the most impactful.
Time Efficient Completions
As an owner, you will expect your development project to be completed in a time efficient manner and you should accept nothing less. Surety bonds guarantee satisfaction in all aspects of the contract and if at any time the project owner becomes dissatisfied with the contractor’s inefficiency, they can simply file a claim with the surety company. Hopefully, the project owner never has to take this drastic step to ensure completion of the project. In any case, the bond will fully protect the project owner from financial loss.
When bonding yourself with a payment bond, you’re actually making a commitment to your subcontractors and suppliers. Without the bond, these individuals would have very little reassurance and would not be protected, if you failed to pay them in a timely manner. However, once you’ve bonded yourself with a payment bond, you’re legally guaranteeing to pay these entities the agreed upon amount, within the allotted time period.
Never do business with a contractor that is not bonded, because there are thousands of scammers out there that will take your money and give you nothing in return. Remember, surety and Canadian Construction bond companies do not bond scammers, only reputable companies.
Other useful posts
- Guide to finding the perfect bonding company
- The Importance Of Your Surety Bond Claims Advocate
- Breaking down performance and payment bonds
- A comprehensive guide on how to Become bonded contractor
- Other types of bonds
- Performance bond insurance: Welcome to the big leagues
- What is a bond?
- What do construction bonds cover?
- Surety bond claims – How do surety claims work?
- Qualifying for a surety bond as a contractor
- Why are construction bonds required?
- How to apply for a construction bond – A complete contractor’s guide
- How much do construction bonds cost?