A advertises for bids. The terms of the bid request require bidders to post a bid...

A advertises for bids. The terms of the bid request require bidders to post a bid bond for $10,000. B submits a bid for $500,000. C submits a bid for $520,000. A awards the contract to B, but B refuses to sign or perform. A then awards the contract to C.

What rights does A have against B? Against B's bid bonding company?

Expert Solution

First you know about bid bond-

A bid bond is a type of contract bond. It serves as a security, and a prequalification measure for a contractor’s bid during a bidding process.

Should the contractor be awarded the bid, the bond is there to guarantee that the contract will be executed at the bid price and under the conditions set forth in the bid. If the contract is not executed according to the bid, a claim against the bond can be made.

A bid bond further guarantees that if the contractor decides to withdraw from the bid after the bid has opened, a claim can be filed against the bond. There are some exceptions to this rule, but only if the contractor can prove that a mistake was made in their bid.

A claim can also be filed against a bid bond if the contractor who has won the bid does not enter into an agreement or does not obtain the necessary performance bond and/or payment bond.

In this sense, bid bonds work like all other surety bonds as agreements made between three parties. The obligee (A) is the party requesting the bond (the project owner or the state), the principal (B) is the party obtaining the bond (the contractor participating in the bid) and the surety bond company ( B's bid bonding company) is the party issuing the bond, which is also responsible for its financial backing.

So this is the rights of A for claim against B and B's Bonding Company.

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keosha answered 8 months ago

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