Home>Levelset Community>Legal Help>(Follow Up on Previous Question 1402) In the state of Indiana are the PERFORMANCE BOND and the PAYMENT BOND the same legal document; we have a performance bond so if they are separate documents are we still covered.
(Follow Up on Previous Question 1402) In the state of Indiana are the PERFORMANCE BOND and the PAYMENT BOND the same legal document; we have a performance bond so if they are separate documents are we still covered.
I had asked a question and you answered but as a follow up we actually have a Performance bond NOT a payment bond and need to see if the same legal document and if not are we still covered. This refers back to question 1402
May 20, 2019
Good question, and it sounds like you're referring to this previous question. Generally, payment and peformance bonds are separate bonds that may be provided under one agreement with a surety to provide both bonds, or they may be secured separately by the party who is required to secure them. For Indiana public projects, any time the overall project exceeds $200,000, both a payment bond and a performance bond must generally be posted by the project's prime contractor. For projects under $200,000 bonding may be present, but the public authority isn't required to make sure bonding is present for those projects. But, where one payment or performance is present on a job, the other will typically also be present - particularly when projects exceed $200,000. To determine whether a payment bond has been provided as well as a performance bond you mentioned above, it might be worthwhile to reach out to the contractor who provided the performance bond or the public agency who let the contract (or both). If the public agency refuses to provide that documentation upon request, following up with a Freedom of Information Act request for the bond might do the trick. By obtaining the payment bond from the public entity, they'd be able to provide whether (1) a payment bond was provided at all, or (2) whether the payment and performance bonds are both memorialized in the same document. Generally, if a bond will provide protection directly to the subcontractors and suppliers on a job, that bond will be a payment bond. If the bond appears to provide protection to the public entity rather than directly to subs and suppliers, then that bond would likely be a performance bond. But regardless - the title or headers of the document should help to make it clear whether a bond is a payment bond or performance bond.
At the end of the day, if only a performance bond has been provided, then that would not serve to protect the payment rights of subcontractors and suppliers beneath the contractor who secured that performance bond. But a performance bond will ensure that the project will continue even if the contractor cannot perform or goes bankrupt - the performance bond allows the surety and public entity to bring in another contractor to complete the work. But in terms of making a claim, a performance bond will not be particularly helpful for a claimant. Though, informing the bond company that there are payment issues on the project could potentially help to put pressure on a non-paying contractor, as could notifying the public entity about the dispute.