"Project security & guarantees"

May 2011

In this paper, Nicholas Gould looks at secondary contracts in the form of informal project security which can be relatively wide ranging. Project security and guarantees are secondary contracts, which provide informal security for construction projects. In the simplest form this could be a collateral warranty that provides a right where none existed before. More important security documents are bonds and guarantees, which provide financial protection in order to support the primary contractual obligations. This paper considers indemnities, guarantees, bonds, insurance, third party rights, collateral warranties, direct agreements, escrow accounts and letters of credit.