Surety Bonds: Payment Bonds
A Payment Bond
is usually required as a companion to the Performance
Bond. The Payment Bond guarantees that material
suppliers and direct labor suppliers will be paid.
bonds guarantee payment of the contractor's obligation
under the contract for subcontractors,
laborers, and materials suppliers associated with
the project. Since liens may not be placed on public
the payment bond may be the only protection for those
supplying labor or materials to a public job The Principal’s
and Surety’s obligations under the bonds may be
determined by statute (“statutory bonds”)
or by the wording of the bond itself (“common law
Bonds are typically separate documents they are issued
for no extra charge, when required.