Construction Bonds

(Introduction)

by Peter Greene, Affleck Greene McMurtry LLP

I have been asked to speak on the topic of construction bonds. In speaking to you today I shall attempt to avoid, where possible, boring you with endless legal jargon and precedents but concentrate on practical advice from one who has had to deal with a number of substantial bond claims in several Provinces of Canada, primarily acting for a Surety. From my experience, practical common sense in the face of difficulties in completing a construction project is far better medicine than resorting to the hiring of an expensive civil litigator/gunslinger, such as myself, to pursue matters before the Courts.

Given time restraints, my topic today will primarily deal with Performance Bonds rather than other types of bonds relating to construction contracts in that Performance Bonds are the primary Bonds when dealing with construction contract claims.

I must preface my remarks by telling you that there is a marked difference between United States of America jurisprudence versus Canadian relating to construction bonding claims. The primary difference is that south of the border most states have past legislation in this area, and when dealing with public construction projects the Miller Act and the “Little Miller Act” apply. The Miller Act applies to contracts for the construction, alteration and repair of any public building or public work of the United States . Much of the litigation in the U.S. is focused on the nature of a “public work” to determine whether the codified statutory provisions of the “Miller Act” apply. In Canada, work performed, especially for the Federal Government, requires bonds to be in a specific format, and as is typical when dealing with any level of government within this country, the substance and format of government Performance Bonds is something to behold. Prescribed Canadian Government Constructions Bonds are a minefield, absent of any practical or legal logic! Given time restraints I shall not be able to deal with that subject matter today. What I will try to deal with today is what I call private Performance Bonds dealt before our Courts primarily through the common law…

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