ABSTRACT
From shipbuilding to highway construction, performance bonding is a common practice. It involves a third party either posting cash or acting as a surety to ensure that a contracting party will perform its obligations. If the obligor does not perform, the obligee can draw the cash or demand that the surety perform if a bond has been executed. Like the law of admiralty and realty, the law of suretyship in the United States is well established and it would seem that in the case of an EPC contract, the owner would simply need to inform the surety that the EPC contractor has failed to perform and the surety will dutifully assume the EPC contractor’s performance obligations. Unfortunately, as owners sometimes find out, this is not always the case.
