Many contractors in Maryland who provide services for large or federal construction projects are required to have a Maryland construction bond. This bond basically states that the provider of the bond will complete the contract in full as to the norms at no additional cost if the contractor fails to complete their obligations. The bond will also protect the interest of the structure or the individual regarding the contract.
There are several different types of bonds that can be purchased including bid bonds, performance bonds and a Maryland construction bond that deals with payments. Bid bonds are written statements that guarantee a bid will be offered as part of the contract. If the contract is broken then the principal and the surety can be sued for damages. Usually the penalty amount is generally 10-20 percent more than the original bid to pay the added expenses that were incurred for the broken contract. The Maryland construction bond company may refuse to undergo the risk of bidding and leave that expense to the construction company.
A performance bond guarantees that the contractor will complete the contract as was outlined in the contract relating to time and price. If the contract is not completed, the owner has the right to sue the construction company and the construction bond company to have the work completed. These contracts for performance bonds help to protect the owners from fraud or misrepresentation by a company and if there is a payment bond then this protects the principal against risk of not being paid by the owner and ensures that all subcontractors and suppliers are able to be paid Click here to know more.