Landmark ruling on performance bonds in building contracts

Singapore

PROPERTY developers can now make it harder for contractors to seek an injunction against calls for unconditional performance bonds used in building works contracts following a landmark ruling by the Court of Appeal.

Conditional or unconditional performance bonds are issued by an insurance company or bank as a surety to guarantee the satisfactory completion of a project by a contractor. They allow the employer to recoup losses in the event of a breach by the contractor.