SAC Enhanced Bond Forms - 2021 Versions
The Surety Association of Canada (SAC) is pleased to introduce updated and improved bond forms for immediate use by owners and contractors across the country.
The industry standard surety bonds have always been those published by the Canadian Construction Documents Committee (CCDC). These instruments have the advantage of having the buy-in and support of various sectors of the industry. Unfortunately, the current CCDC bond forms have become hopelessly out of date. The template documents were last modified in 2002 and while CCDC is working on updates, there is currently no target date for publication of these revisions.
From our perspective, working with industry standards that are almost 20 years old was simply unacceptable and SAC believes that it is essential to provide the marketplace with updated options that reflected the new realities of the Canadian construction and surety industries as we move into the third decade of the 21st century.
In fact, this is not the first time that SAC has acted independently to publish updates/improvements to the standard CCDC bond documents. In 2012 we released what became known as the SAC Process Enhanced Performance Bond. This instrument was the first to include expanded clarification and responsiveness provisions and introduced the concepts of a pre-default meeting, emergency work and mitigation work, among other additions. More details about the 2012 SAC Performance Bond can be found on the SAC website HERE.
In early 2018, as SAC was working with the province of Ontario to draft the prescribed performance bond form for its newly passed Construction Act, we began with the SAC bond as the starting template and added additional enhancements around clarity, responsiveness, and communication. We also created a companion Labour & Material Payment Bond with similar enhancements that provided claimants and owners with more certainty around the claims process. These new Ontario-specific forms are the current state-of-the-art and are prescribed for all public work in the province with a contract value greater than $500,000. Additional information about these Ontario Act instruments can be found on the SAC website HERE.
The new 2021 SAC bond forms represent the 3rd generation in the evolution of leading-edge surety instruments. They attempt to build on the standards established by their predecessors and introduce a few more innovations and updates. The new Bid Bond begins with the existing CCDC standard and brings in a few changes, mostly of a clarifying nature. The Performance and Payment bonds are based on the more up-to-date Ontario bond templates and include several key changes. The objective here was two-fold:
- Remove those references that are specific to Ontario or its governing legislation and ensure that the documents are generic and can be used in any jurisdiction across the country; and,
- Incorporate provisions that respond to developments in the construction and surety industries since the publication of the Ontario bonds in 2018 (e.g., the Supreme Court decision in Bird v Valard).
Note that all of the changes to all three bonds were being contemplated by CCDC as part of its update process. It is anticipated that once CCDC finalizes its changes, these will once again become the industry standard.