In a good economy, claims against performance and payment bondscan be minimized as bonded contractors, who must personallyindemnify the surety company, risk using funds from one project tofund one having cash-flow difficulties.
However, what happens when fewer or, in some cases, no projectsare being let by private developers or governmental agencies? Whereis the cash flow going to come from to support projects where thecontractor needs the cash? What happens if there is no new cashflow?
The answer is that there will be a rise in defaults bycontractors on existing contracts.
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