Indemnity Contract to Protect Surety 2
Protect the surety by signing indemnity contract
Indemnity is a kind of washing your hands off when something goes wrong. When the principal or the contractor defaults or is responsible for breaching of the bonded agreement then the whole onus comes on the head of the surety. But if surety has signed an indemnity contract to protect surety then the losses will not have to be borne by the surety.
The relationship of a principal and surety is a very close one and it takes a long and tedious process to trust a principal. But, if both the parties work in harmony then this relationship can be a really long term relationship. The terms and conditions of surety are not written anywhere but they are just understood and followed. Just in case the trustworthy contractor fails to perform his duties as per the agreement then the whole liability of paying the remaining amount and everything else will come on the surety.
To prevent this kind of unpleasant situation from arising the surety must sign indemnity contract to protect surety. This contract favors the surety in case there is any default on the behalf of the contractor.
The basic difference between surety and any other kind of insurance is that the insurance companies bear the loss if the contractor fails but the surety will avoid bearing any kind of loss whatsoever. This indemnity contract will keep the surety safe by waiving off any liability whatsoever from the head of the surety. This insurance is a boon to the surety.
Sample Template Preview
For the protection and security of the company, the undersigned, assigns, transfers and conveys to the company all right, title and interest of the undersigned in and to all supplies, tools, plant, equipment and materials of every nature and description that he, she, or it may now or later have on the work, or in, or on, about the site, and also all materials purchased for or chargeable to the contract which may be in progress of manufacture or construction, or in transportation, or in storage elsewhere, and also all his, her, or its rights in and to all subcontracts relating to the work which have been or may be made, together with the materials, and as well as rights, title and interests of the undersigned in and to all bonds executed to the undersigned securing performance by subcontractors of subcontracts, subrogating the company to all rights, title and interests of the undersigned; and the undersigned authorize and empower the company, its authorized agents or attorneys, to enter on and take possession of the supplies, tools, plant, equipment, materials, and subcontracts, and enforce, use and enjoy title to them and possession of them in the event of any default on the part of the undersigned in performance of the contract referred to or in payment of the premiums.