Retention Bond

A Retention Bond is to protect the risk of the contractor’s failure to perform the contract after the contractor finishes work or project. It is an agreement between a contractor and client by a third party known as a bond provider which acts as a guarantor. The Bond agreement states that in return for the client not holding cash retention, the bond provider will undertake to pay the client up to the amount that they would have had by way of cash retention should the contractor fail to carry out the works or remedy defects. Retention monies are normally viewed as a security for the cost of rectifying defective works.¬†

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