How Long Does A Performance Bond Last?

When taking out a performance bond, many contractors may wonder about their validity period, and when they expire. 

The duration of a performance bond varies and is greatly dependent on how long it takes the contractor to achieve practical completion or making good of defects. Some performance bonds also have a definitive bond expiry date included in the bond wording, commonly known as a longstop date, which is not influenced by when practical completion or making good of defects is achieved.

This article will discuss what you need to know about performance bond validity, including what happens when a performance bond expires, and whether they expire in the traditional sense.

Performance bonds are typically valid until bond cancellation has been achieved.

If the bond overruns and exceeds the agreed bond duration in which the bond provider has charged for, overrun fees may be applicable. These are paid in perpetuity until bond cancelled has been achieved as per the bond wording and associated contract.

Typically a performance bond only expires when there is a longstop date detailed in the bond wording and/or associated contract. If there is not a longstop date detailed in the bond, the performance bond remains in place and valid until bond cancellation has been achieved (usually POC or GMOD).

Calculating the length you need for your performance bonds depending on the predicted length of work can be confusing and frustrating for contractors, especially if you are trying to complete the application yourself. CG Bonds can help and work with the employer to understand the exact bond duration and cover required. Contact us today for help with your performance bond application.

The information provided in this blog is not intended to constitute legal advice or any other advice of a professional nature. The recipient of this information contained in this blog should always consult legal or professional advice.