‘On demand’ no more

We often come across the sentiment that ‘on demand’ bonds provide an absolute entitlement to security, no questions asked. It is becoming clearer and clearer that this is no longer the case. Occasionally, a Beneficiary will attempt to place a call on the bond even though the Contractor is not strictly in default of the…

Construction of Vector Arena credit: Grayson Engineering

Calling up a bond – Grounds for opposing a call

Mainzeal was engaged to construct Vector Arena. The contract required Mainzeal to provide a bond to secure Mainzeal’s performance under the contract. Mainzeal arranged for Great Lakes Reinsurance to provide this bond to the principal. Payment of the bond was conditional on an engineer’s certificate which was to state: that the contractor had defaulted; that…