Bond, Indemnity, Guarantee and Warranty

18 May 2009

Reported by Steve Yu, Committee Member & CPD Convenor, Young Surveyors Group

Thank you Mr. K K Cheung, partner of Construction and Arbitration Practice Group, Deacons Hong Kong for giving us a seminar on ˇ§Bond, Indemnity, Guarantee and Warrantyˇ¨ on 18 May 2009. The seminar was a successful one which attracted a full house.

Mr. Cheung has extensive experience in handling construction disputes and had engaged in a variety of private and government projects while practiced as a quantity surveyor. During the seminar, he showed the differences between these legal terms, which are commonly found in construction contracts, in terms of their necessity, formalities, execution and enforcement.

Mr. Cheung pointed out that the essence of distinguishing a demand bond and a conditional bond is the words contained in the clauses. For demand bond, it should be drafted expressly and precisely to allow the employer to call the bond unconditionally in the event of default by the contractor. Moreover, he also explained that there is no direct relationship between the contractorˇ¦s obligations to be held liable for and indemnify the employer against the liabilities as stipulated in the contract and maintain an insurance policy to cover such liabilities. Mr. Cheung also covered the form of guarantee and warranty that are commonly used in the construction projects.

At the end of the seminar, Mr. Cheung patiently answered the questions from the floor and our committee member presented a souvenir to Mr. Cheung to express our sincere thanks.