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Owner's Faulty Notice Negates Bond Coverage Bonds-performance; Notice

Saturday, July 03, 2004 01:34 pm

 
Owner's Faulty Notice Negates Bond Coverage Bonds-performance; Notice

A federal appeals court has ruled that a project owner did not give a bonding company adequate notice before bringing in a replacement contractor. The surety was discharged of its performance bond obligations.

The Town of Greenfield, Massachusetts, awarded a contract to Interstate Construction Co. to renovate a middle school building. Interstate furnished a performance bond issued by Seaboard Surety Co. The bond was on an AIA form. Paragraph 5 stated that if the surety failed to meet its obligations under the bond, the project owner - after 15 days written notice - could pursue any available legal remedy.

The Town declare [...]

 
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