We currently offer the following types of Bonds:
- CUSTOMS BONDS (RIT / RIB)
- BID BONDS
- PERFORMANCE BONDS
- ADVANCE PAYMENT BONDS
- CUSTOMS BONDS
These bonds are normally used for the storage of goods without payment of duty in a bonded warehouse under customs control and as and when the goods are removed, duty is paid. If the goods are fully removed within the bond period and the duty paid, the Bond duly cancelled should be returned to us either directly by the Customs Department or through the Insured.
This bond is used for importation of raw materials duty free on the condition that the finished goods are exported out of the country. These Bonds are mainly required by industries which manufacture under Bond.
If the goods are not exported or are sold in the country, duty is payable by the Insured, and in case of failure to do so the Bond amount would be called for the Customs Department.
- BID BONDS
These Bonds are also sometimes called tender bonds and these can be classified into three categories:-
Bid Bonds with no financial obligation (for Contractors)
These bonds are normally issued for tenders, where the only obligation is a “Promisory Note” to the effect that in case the tenderer wins the tender, we will issue a Performance Bond.
Bid Bonds which have an element of a Guarantee
In such bonds, a bond amount is stated and this amount is normally a percentage of the tender amount. This amount is normally assumed to be the cost, which would be incurred by the principal for calling for new tenders.
Bid Bonds used to tender for supply of Goods
Organisations which want to buy goods often call for tender for supply of such goods from interested suppliers.
Often, one condition on such tenders is that a bid or tender bond should be provided with along with the tender documents.
The common conditions in such tenders are that the tender should be valid for a certain time period (i.e. 30 days, 60 days, etc), the tender will not be withdrawn before the expiry of the time period or if awarded the tender, a supply or performance bond will be supplied. There may also be different conditions on different types of tender documents.
Bid bonds normally have a period during which the bid is valid and in the event the insured is not awarded the tender, the bid bond lapses.
- PERFORAMCE BONDS
These bonds are normally issued as a surety for due performance of a contract, such as construction of property, erection of Plant and Machinery, etc.
Under these bonds, the bond amount is normally stated as a percentage of the contract amount. This amount is normally assumed to be the cost of calling for fresh tenders, including the cost of doing repair work, etc, on any work already done by the contractor, if the contractor fails or defaults on the contract.
- ADVANCE PAYMENT BONDS
These types of Bonds are normally associated with contracts for Construction of Property or Erection of Plant and Machinery.
Normally, payments are made by the principal to the contractor on either total completion of a project or on completion of each phase of the project. These payments are normally made after approval of the costs by the Architects and Quantity Surveyors of the project.
In any case, the contractor must use some of his own finances to do the necessary work and then await payment.
Sometimes, the project may be so large that the funds required by the contractor even for one phase of the project may be beyond his financial resources, and in some cases, the principal may make and on account payment to the contractor, subject to the final costs being accessed, in which event, an Advance Payment bond will be called for.
4 years ago / Comments Off on Bonds