Legal Blog

Performance Bond

Hoopp Realty Inc v. Guarantee Company of North America 2019 Alta (C.A.)

Court of Appeal confirmed motion judge’s decision that the obligations of a performance bond emanated from both the contractor and the surety. Accordingly, even though the owner had lost its right of action against the contractor because of the expiry of a limitations period, the surety was still liable to the owner. The surety argued that allowing the claim would do indirectly what the owner could not do directly (i.e. although the contractor would not be directly liable to the owner, it would be liable under its indemnification of the surety. The court, by holding that the obligations of the contractor and the surety were coextensive, did not care. It held that when the contractor signed the bond, it exposed itself to liability to the surety for the claims and would not be home free until the owner had no further claims against the surety.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.