Construction Law/Perfomance bond


When is a perfomance bond recallable.....sample this case
The contract is a design and build,the employer refused to pay as per contract  terms but went ahead and took over sites and continued to use them,meanwhile work goes slow due to non payment and contractor borrow monies from back to accelerate work which was at 99 % when employer terminates contract allegiance delays despite numerouse letters requesting for payments
Q1. Is this termination valid
Q2. Can they  recall of perfomance bond
Q3. What is the purpose of perfomance bond
Q4.what is the contractors recourse, arbitration was allowed
Thank you

Dear Sammy
I am sorry for delay in answering your question. I am trying to answer your question; Bonds are provided as useful means of creating financial security for the Employer for the Contractor’s failure to perform his contractual obligations.Generally, as a rule, a performance bond remains in force until the stated discharge date which is usually either after practical completion of the works or after making good any defects. However, should the practical completion or making good of defects occur earlier than the bond date, the bond cannot be recalled or withdrawn unless the client agrees to an earlier release date.       Furthermore, a performance bond is not an insurance policy which normally is a contract of indemnity under which the insured is indemnified in the event of loss, subject to the adequacy of the sum insured.Once a bond is issued, it cannot be cancelled until the stated discharge date or until the subject matter of
the indemnity has been completed satisfactorily, however, an insurance policy can be cancelled before its expiry date.Contractor recourse shall be as per country applicable law for arbitration.

I hope this will help to you.
with best regards

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Sanjay Khandelwal


I can answer related to the various construction contracts forms related with disputes and claims.Expertise in to evalute the extension of time,cost and profit claims.I can answer regarding the contract management in civil works.


I have the experience of construction industry, as a consultants,executor of construction activities of infrastructure development like road and buildings. I have the experience of various software related to design of highways and quantity evaluation.

I am life member of Indian Road Congress,INDIA I am presently employed with M/s Lion Engineering Consultants,INDIA

My educational qualifications are as below: I am engineering graduate from MITS, INDIA,1987 I have completed my Post graduation from NIT,INDIA,2011

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