A payment bond is required on many construction projects in the construction industry the payment bond is usually issued along with the performance bondthe payment bond forms a three way contract between the owner the contractor and the surety to make sure that all subcontractors laborers and material suppliers will be paid leaving the project lien free. The law of payment bonds second edition the law of payment bonds second edition this book addresses all aspects of payment bonds from the basic nature and purpose of payment bonds what they cover who is entitled to coverage under such bonds how a payment claim is made and supported to the defenses sureties have to claims. This publication has been prepared for use in conjunction with the mid winter program of the fidelity surety law committee of the tort insurance practice section of the american bar association held in san francisco california on january 30 1998 p iii. No bond rights once the gc has paid subs in full must be filed more than 90 days after claimants last work but within one year of claimants last work there is a defense of payment under the bond construction law survival manual appendix 30. As every other bond performance and payment bonds are agreements made between three parties the obligee requesting the bond the state or private project owner the principal who obtains the bond the contractor and the surety bond company which underwrites the bond and backs it financially
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