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Construction Bonds: A Useful Tool in a Local Government’s Strongbox

As published in Roadrunner Fall 2018:

Construction bonds are commonly used for public works infrastructure projects. Broadly speaking, a bond is a three-party agreement between the bonding company (the “Surety”), the service provider, such as a general or subcontractor (the “Principal” or “contractor”) and the service recipient or beneficiary, such as the project owner (the “Obligee” or “owner”). Under the bond, the Surety is required to step in and fulfill the Principal’s obligations to the Obligee in the event that the Principal breaches its obligations…

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