By: Richard E. Guttentag, Esq. and Alexander S. Beck, Esq., Stearns, Roberts & Guttentag, LLC Prior to issuing payment or performance bonds, it is common for sureties to require contractors or subcontractors seeking bonding to execute a general indemnity agreement (“indemnity agreement”). In addition to the contractor entity executing the indemnity agreement, sureties generally require the contractor’s individual owners, and even their spouses to execute the agreement. The purpose of the indemnity agreement is, in part, to indemnify and hold the surety harmless, to minimize the surety’s losses, and to increase the surety’s rights to recover payments made under the

By: Richard E. Guttentag, Esq., Stearns, Roberts & Guttentag, LLC In Allegheny Casualty Co. v. Archer-Western/Demaria Joint Venture III, 2014 WL 4162787, the court ruled that a surety’s liability under a performance bond is generally limited to the penal sum of the bond, particularly where a surety limits its liability in the contract under which it agrees to complete the defaulting contractors’ work. The Allegheny Casualty Co. case arose out of a large construction project. The General Contractor entered into a subcontract with a drywall subcontractor (“Subcontractor”). Pursuant to the terms of the subcontract, the Subcontractor obtained a Performance Bond

By: Richard E. Guttentag, Esq., Stearns, Roberts & Guttentag, LLC As previously reported, the case of Allegheny Cas. Co. v. Archer-Western/Demaria Joint Venture III, 2014 WL 4162787 (M.D. Fla. August 21, 2014), involved a dispute between a General Contractor (“Contractor”) and a performance bond Surety (“Surety”) on a construction project.  In addition to the court’s ruling that a surety’s liability under a performance bond was generally limited to the penal sum of the bond (discussed in a prior article), this case also analyzed the issue of whether the Contractor intentionally misrepresented material information to the Surety resulting in the Surety