Advance Payment Bond
Bond is to guarantee that the Contractor is able to make repayments for the advanced fund.
Bond is an instrument to guarantee the performance of the Contractor in fulfilling the contractual obligations and terms as required by the Principal in a construction-related contract. In the event of the non-performance of the Contractor, the Principal is entitled to demand the amount guaranteed in the Bond, which shall be paid by the Insurance Company accordingly. The Insurance Company, in turn, shall recover the losses from the Contractor and its guarantors.
Advance Payment Bond is required when a Contractor applies for an advance payment from the Principal to help fund the preliminary costs and mobilisation works of the contract. The main purpose of the Bond is to guarantee that the Contractor is able to make repayments for the advanced fund. The mode of repayment is through deduction or recoupment from subsequent progress payments, the quantum of which is determined by the Principal.