Posted: Wed Dec 22, 2004 8:38 am
A public works construction contract is bonded with a standard performance bond issued by a corporate surety. Job problems arise leading to default of the contractor. The surety steps in, and after deciding not to pay the bond penalty, exercises the option of hiring a new contractor to complete the construction, which the surety tenders to the owner. It also tenders a takeover/completion agreement to the owner.
Question 1. What legal obligation does the owner have to accept the new contractor and the takeover/completion agreement?
Question 2. What legal obligation does the owner have to accept the new contractor if the takeover/completion agreement has conditions that deviate substantially from the original construction contract terms?
Question 3. Are you aware of any case(s) where owner did not accept the new contractor and/or takeover/completion agreement?
Akos Swierkiewicz
IRCOS, LLC______________________________________
Insurance & Reinsurance Consulting & Outsourcing Services
Direct Dial: 215 736 9970
E mail: akos.s@ircosllc.com
Question 1. What legal obligation does the owner have to accept the new contractor and the takeover/completion agreement?
Question 2. What legal obligation does the owner have to accept the new contractor if the takeover/completion agreement has conditions that deviate substantially from the original construction contract terms?
Question 3. Are you aware of any case(s) where owner did not accept the new contractor and/or takeover/completion agreement?
Akos Swierkiewicz
IRCOS, LLC______________________________________
Insurance & Reinsurance Consulting & Outsourcing Services
Direct Dial: 215 736 9970
E mail: akos.s@ircosllc.com