Conditional Logic - What Contractors Should Be Aware Of

Conditional Logic - Contractors should be aware that notice of default can be an express condition precedent to a surety's performance bond obligation.

The importance of timely and effective communication on construction projects cannot be overstated. This is particularly important in the context of a contractor seeking to preserve its rights as obligee on a performance bond when the underlying principal has failed to perform. Although contractors and sureties are key partners on bonded projects, they remain parties to a written contract (or contracts) often containing specific conditions precedent necessary for triggering the rights and obligations of the contracting parties. A recent court decision (identifying information remains undisclosed) underscores the importance of notice to the surety of a default declaration as a condition precedent and provides a costly lesson as to what could happen when such notice is not timely or properly given. 

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