USA vrs. Europe Contract Bond

[Bond Guy]

We are quoting a project in the USA to a company in Europe. It is common in Europe to obtain a Bond for the down payment amount upon award of the contract. The bond is for the down payment amount and is completed when we arrive on site. This protects the purchaser that we will not take off with the initial down payment. Typically this is 20% of the total contract and would be required for about 1 year from award to arrival on site. Value of the bond would be about $2,000,000.00 which is 20% of the contract. Is that available in the USA?

[Surety Queen]

Originally Posted by Bond Guy

We are quoting a project in the USA to a company in Europe. It is common in Europe to obtain a Bond for the down payment amount upon award of the contract. The bond is for the down payment amount and is completed when we arrive on site. This protects the purchaser that we will not take off with the initial down payment. Typically this is 20% of the total contract and would be required for about 1 year from award to arrival on site. Value of the bond would be about $2,000,000.00 which is 20% of the contract. Is that available in the USA?

Have absolutely no idea - as we do not do any kind of international bonding. I suggest you let your fingers do the walking on the World Wide Web to see if you can find a bonding company who does handle international.
Sorry.

[marietta68]

Originally Posted by Bond Guy

We are quoting a project in the USA to a company in Europe. It is common in Europe to obtain a Bond for the down payment amount upon award of the contract. The bond is for the down payment amount and is completed when we arrive on site. This protects the purchaser that we will not take off with the initial down payment. Typically this is 20% of the total contract and would be required for about 1 year from award to arrival on site. Value of the bond would be about $2,000,000.00 which is 20% of the contract. Is that available in the USA?

It's called an "advance payment bond", but surety bonds are used far less frequently in European countries - the usual security instrument is a letter of credit. The country of obligation is very pertinent in this situation. You'll have difficulty accessing an international market for a one shot deal - and if you have never been bonded before, it'll be next to impossible to get this underwritten. Zurich, AIG, Travelers, Liberty Mutual, Chubb are some of the surety companies which are capable of writing surety overseas for qualified clients.

[Surety Queen]

Originally Posted by marietta68

It's called an "advance payment bond", but surety bonds are used far less frequently in European countries - the usual security instrument is a letter of credit. The country of obligation is very pertinent in this situation. You'll have difficulty accessing an international market for a one shot deal - and if you have never been bonded before, it'll be next to impossible to get this underwritten. Zurich, AIG, Travelers, Liberty Mutual, Chubb are some of the surety companies which are capable of writing surety overseas for qualified clients.

Marietta68 - Thanks very much for this good information.

[bondman]

Originally Posted by marietta68

It's called an "advance payment bond", but surety bonds are used far less frequently in European countries - the usual security instrument is a letter of credit. The country of obligation is very pertinent in this situation. You'll have difficulty accessing an international market for a one shot deal - and if you have never been bonded before, it'll be next to impossible to get this underwritten. Zurich, AIG, Travelers, Liberty Mutual, Chubb are some of the surety companies which are capable of writing surety overseas for qualified clients.

Actually you should be able to raise the bond via your Bankers subject to credit. It will be an on demand bond rather than a conditional bond like you use in the USA. Your bank should be able to counter guarantee a local bank in the country of the Employer. If you can give some details I can tell you what to ask your bank for.