How Claims Hurt
We’ve emphasized, in previous blogs, that a contractor has control in avoiding claims. The best way to avoid having a claim filed is to make sure that the contractor fulfills and documents all contractual obligations. But, if the contractor is not able to fulfill the contractual obligations, a claim may be filed. This will hurt the reputation of the contractor in many ways. The Financial Burden of a Claim First of all, the financial burden will be evident once the contractor is found to have defaulted on the contract. The contractor may have to pay the full amount. They may also have to pay any legal fees associated with the claim. A surety bond is not meant to protect the contractor. Instead it ensure the project owner that they will not lose out on money if the contractor defaults on the contract. If the surety bond producer deems that the contractor has defaulted on the contract, they will pay the project owner. They will then seek reimbursement from the contractor. The Risk of Ignoring Claims But what if the contractor decides not to pay the claim? They may feel they weren’t in the wrong or may not have the financial...
Read more
