New Bonding Requirements of the July 1, 2018 Changes:

 

  • the contractor is now required to provide a performance and labour and material payment bond on “public contracts” worth $500,000.00 or more;

  •   while the definition of a "public contract" is complicated, it is also, effectivelly , any contract funded with tax payer's money;

  • the prescribed form of labour and material payment bond for public contracts only provides protection to 1st and 2nd tier subcontractors.  (This notwithstanding that the Act calls for coverage for all subcontractors and suppliers of services and materials);

  • in addition, the prescribed form of labour and material payment bond effectively limits the recovery of a second-tier subcontractor to that subcontractor's  holdback entitlement.

 

As always, determining one's rights and obligations under construction legislation can be very complicated.  The above is intended for general information and not for use in any particular circumstance.  It is recommended that experienced construction law counsel be consulted in this regard. 

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