Payment Bond Template: Surety, Claim and Project Terms

Payment Bond Template

Bond Number: [Bond Number]

Date: [Date]

1. Parties

Principal / Contractor: [Full Legal Name]

Address: [Address]

Surety: [Full Legal Name]

Address: [Address]

Obligee / Owner: [Full Legal Name]

Address: [Address]

2. Construction Contract Information

This Payment Bond relates to the following contract:

Contract Name or Description: [Project Name or Contract Description]

Contract Date: [Date]

Project Address or Location: [Project Address / Location]

If applicable, additional contract reference details:

[Contract Number / Bid Number / Procurement Reference / Other]

3. Penal Sum of Bond

The penal sum of this Payment Bond is:

[$Amount]

The Principal and Surety are jointly and severally bound to the Obligee in the penal sum stated above, subject to the terms of this Bond.

4. Recitals

WHEREAS, the Principal has entered into the construction contract identified above with the Obligee for the performance of work on the project described in this Bond; and

WHEREAS, the Principal is required or desires to furnish a Payment Bond in connection with that contract;

NOW, THEREFORE, the Principal and Surety agree as follows:

5. Condition of Bond

If the Principal promptly makes payment to all persons or entities entitled to payment for labor, materials, equipment, supplies, or services furnished for use in performing the contract, then this Bond shall be null and void; otherwise, it shall remain in full force and effect, subject to its terms and applicable law.

6. Covered Payment Obligations

This Bond applies to payment obligations arising from:

☐ labor furnished to the project

☐ materials supplied to the project

☐ equipment rental or use, if covered

☐ project-related services, if covered

☐ other covered items: [Describe]

Additional limits or scope details, if any:

[Insert details]

7. Claimants

A claimant under this Bond may include:

☐ subcontractor

☐ supplier

☐ laborer

☐ material provider

☐ equipment lessor, if covered

☐ other person or entity entitled by contract or law: [Describe]

Claim rights and eligibility shall be determined according to the contract terms and applicable law.

8. Principal Obligations

The Principal agrees to:

pay all covered amounts when due;

perform its payment obligations under the contract;

cooperate with the Surety in the investigation, defense, settlement, or resolution of any claim under this Bond;

provide records and supporting information upon request relating to any claim or payment issue.

Additional principal obligations, if any:

9. Surety Obligations

If the Principal fails to satisfy covered payment obligations and a valid claim is made under this Bond, the Surety shall respond according to the terms of this Bond, the contract, and applicable law.

The Surety may:

☐ investigate claims

☐ request supporting documentation

☐ pay valid claims directly

☐ deny claims not covered by the Bond

☐ resolve claims through settlement, defense, or other lawful means

☐ exercise any other right allowed by law or contract

10. Claim Procedure

A person asserting a claim under this Bond shall provide the following, if required:

[written notice of claim]

[amount claimed]

[description of labor, materials, or services furnished]

[dates of performance or delivery]

[supporting invoices, statements, or contracts]

[other required information]

Claim notice shall be sent to:

Principal: [Address]

Surety: [Address]

Obligee, if applicable: [Address]

Any timing, notice, or filing requirement shall be governed by the contract and applicable law.

11. Time Limits and Notice

This Bond is subject to any notice, waiting period, suit limitation, or other claim-enforcement requirement imposed by:

☐ the bonded contract

☐ applicable statute

☐ procurement rules

☐ other governing terms: [Describe]

If specific time periods apply, insert them here:

12. Defenses and Limitations

The Surety reserves all defenses, limitations, offsets, and rights available under:

the Bond;

the bonded contract;

applicable law;

any proper defense to the claimed amount or claimant status.

Nothing in this Bond shall expand liability beyond the penal sum unless applicable law expressly requires otherwise.

13. Relationship to Contract

This Bond is issued in connection with the contract identified above.

Except as specifically stated in this Bond or required by law, the Bond does not change the duties, prices, schedules, or other substantive terms of the underlying contract.

14. Changes to Contract

No change, extension, alteration, modification, or addition to the contract or the work shall release or discharge the Surety from liability under this Bond except to the extent provided by law or by the express terms of this Bond.

If notice of changes is required, state it here:

[Insert details or write “No separate notice required”]

15. Partial Payments and Reduction of Bond

Amounts paid by the Surety in good-faith satisfaction of covered claims shall reduce the penal sum of this Bond to the extent of those payments.

If no reduction method other than ordinary payment credit is intended, write:

[None]

16. Governing Law

This Bond shall be governed by the laws of:

☐ the state of [State]

☐ the federal law applicable to the project, if any

☐ other: [Describe]

17. Entire Bond

This Payment Bond contains the full understanding of the parties regarding the surety obligation described above and replaces prior discussions on that subject unless otherwise stated in writing.

If the Bond form is required by statute, owner form, or procurement document, identify that here:

18. Signatures

Principal / Contractor Signature: __________________________

Name: [Full Name]

Title: [Title]

Company: [Company Name]

Date: [Date]

Surety Signature: __________________________

Name: [Full Name]

Title: [Title / Attorney-in-Fact]

Company: [Surety Name]

Date: [Date]

Power of Attorney Attached:

☐ yes

☐ no

Obligee Acceptance, if applicable:

Obligee Signature: __________________________

Name: [Full Name]

Title: [Title]

Company: [Company Name]

Date: [Date]

19. Surety Seal and Notary

Surety Seal, if required:

[Insert seal area]

State of [State]

County of [County]

On this [Day] of [Month], [Year], before me, the undersigned notary public, personally appeared [Name of Signer(s)], known to me or satisfactorily proven to be the person(s) whose name(s) are subscribed to this instrument, and acknowledged that they executed the same for the purposes stated herein.

Notary Public Signature: __________________________

Name: [Notary Name]

My Commission Expires: [Date]