Surety bonds and sureties in the construction industry

180 Pages·1.6 MB·en_US

by  Openshaw, Mark F.

SURETY BONDS AND SURETIES IN THE CONSTRUCTION INDUSTRY
BY
MARK F. OPENSHAW
A REPORT PRESENTED TO THE GRADUATE COMMITTEE
OF THE DEPARTMENT OF CIVIL ENGINEERING IN
PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE DEGREE OF MASTER OF ENGINEERING
UNIVERSITY OF FLORIDA
Summer 1992
I
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a.
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TABLE OF CONTENTS
Chapter One - Construction and Surety
1
Introduction
1 . 1
1.2 Surety Bonds: What are They? 2
1.2.1 Labor and Material Payment Bonds
. . 3
1.2.2 Performance Bonds
4
1.2.3 Bid Bonds 7
1 Who Requires Surety Bonds? 9
.
1.3.1 What Interest Should Architects,
Engineers, and Owners have in Bonds? 11
1.4 Sureties 13
1.4.1 Corporate Sureties 13
1.4.2 Surety Agents 15
1.4.3 The SAA and the NASBP 17
1.4.4 Individual Sureties 17
1.4.5 Letters of Credit 21
1.5 Obtaining Bonds 22
1.5.1 Indemnity 26
1.5.2 Bonding Capacity 27
1.5.3 Bond Premiums 28
1.6 Bonds and Contract Types 31
1.6.1 Design/Build 31
1.6.2 Cost Plus Fee Contract 32
1.6.3 Joint Venture 32
1.6.4 Construction Management 32
Chapter Two - Bonds and Sureties at Work 33
2.1 Obligations of the Surety 33
...
2.1.1 Cancellation of Contract Bonds 35
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