(i) mutual agreement between the Government, the defaulting contractor and the guarantor; If the general contractor does not comply with its obligations under the main contract, the guarantor of the performance guarantee may be required to take measures in accordance with the performance guarantee. The performance guarantee usually offers the guarantor several possibilities to remedy the loss of performance of the general contractor. One of these options may be “taking charge” and completing the scope of work of the general contractor. If the performance guarantee decides to take over the scope of the services of the general contractor, the owner and the guarantor are advised to conclude a “trade-in contract”. (4) The customer may not pay to the guarantor more than the amount he spent on the performance of the work and the performance of his obligations arising from the defaulting contractor`s payment guarantee. Payments to the guarantor for the repayment of his obligations from the defaulting contractor`s payment guarantee can only be made on the basis of a power of attorney of – (3) If the proceeds of the contract are made to a financial institution, the guarantee cannot be paid from unpaid income, unless the assignee gives his written consent. (c) The contractor should allow offers of security to finalize the contract, unless it considers that the persons or undertakings proposed by the guarantor to complete the work are not competent and qualified or that the proposal is not in the best interest of the Government. e) Any take-back agreement must require the guarantor to enter into the contract and the government to pay the guarantor`s fees and expenses up to the balance of the contract price not paid at the time of default, subject to the following conditions: If the general contractor does not fulfill its scope of services, the owner should review the requirements of the performance guarantee. These requirements typically include termination and procedural requirements to compel the guarantor to take action. If the owner has met the requirements of the performance guarantee, the guarantor must act in accordance with the performance guarantee. From there, the guarantor has options if he is faced with a default of the general contractor. If the guarantor decides to resume the work of the general contractor after the general contractor is in default with a construction project, it is important that the owner and the guarantor enter into a take-back contract. The takeover agreement makes it possible to understand the extent of the remaining work to be carried out by the guarantor.
Owners should keep an eye on the end of the project and negotiate a takeover agreement with the guarantor that minimizes potential litigation and mitigates losses. (1) All unpaid income of the defaulting contractor, including retained percentages and estimates of the progress of work performed prior to termination, is subject to debts owed to the government contractor, unless the unpaid revenues can be used to pay for the actual costs and expenses incurred in completing the work. but excluding its payments and obligations under the payment guarantee provided under the contract. A takeover agreement is an agreement between the guarantor of the prime contractor`s performance guarantee and the creditor [the owner], which is “the essential document for the conclusion of the guarantee and the creditor to define their future rights and obligations in order to determine a clear understanding of the scope of the remaining work to be performed”. Id. (cites Philip L. Bruner & Patrick J. O`Connor, Jr., 4A Bruner & O`Connor on Construction Law ยง 12:80 (2009)). The take-back contract is important because it takes over the guarantor`s obligations under the surety and is the express contract between the guarantor and the creditor, which can form the basis of a contractual claim. XL Specialty Ins. Co.c.
Commonwealth, Dep`t of Transp., 624 P.E.2d 658, 665 (2006). For many construction projects, the general contractor may be required to provide a performance guarantee. This performance guarantee guarantees the execution of the main contract if the general contractor is in default. A performance guarantee is a tripartite contract between a guarantor (the party that promises to be liable if the customer does not provide the performance), the customer (the party performing the work – the general contractor) and the creditor (the party protected by the performance guarantee – the owner). (a) The procedures provided for in this section shall apply primarily, but not exclusively, to fixed-price construction contracts terminated for late payment. As a general rule, without real construction management skills, owners prefer that the guarantor choose to take over and complete the scope of work of the main contract. Guarantors may also prefer to take over and conclude the main contract because “upon completion of the project, the guarantor itself receives greater control than if it had chosen to bind the creditor [the owner] upon completion, since the guarantor may choose the contractor or finishing consultant to complete the project and control the cost of completion.” Seawatch at the Marathon Condo… .