The Importance of Using a Suretyship Agreement in a Project

In carrying out a project as an individual, company, government agency or other institution, a form of guarantee is needed which will ensure that the Principals carry out the work in accordance with the project desired by the Obligee as agreed in an agreement. More specifically, based on the Regulation of the Minister of Finance of the Republic of Indonesia Number 124 / PMK.010 / 2008, the agreement is called Suretyship, which is a general insurance business line that guarantees the Principal's ability to carry out obligations in accordance with the principal agreement between the Principal and the Obligee.

What is meant by Principals are employees who get jobs from the Obligee who must then carry out the project in accordance with the principal agreement made with the Obligee. Meanwhile, what is meant by an obligee is the owner of the work in the form of a project and is the party entitled to fulfill the obligations of the principal based on the principal agreement agreed by both parties. The last one is surety, which is an insurance company that provides guarantees for the agreement made by the Principal and Obligee, and guarantees the Principal to pay to the Obligee as the party who owns the project if the Principal cannot complete the project in accordance with the agreement agreed by both parties.

There are several types of suretyship including:


Bid Guarantee (Bid / tender Bond)

Bid Security is defined as a guarantee used to participate in a tender as one of the requirements for the bid document which contains security guarantees to provide compensation if the principal resigns.

Advance Payment Bond

It is a guarantee that is used when the Principal takes the down payment provided by the Obligee to start his work. Contains a surety guarantee to return the down payment that has been received by the Principal to carry out the work if the Principal fails to carry out the work and cannot return the advance payment.

Maintenance Bond

It is a guarantee from Surety for the maintenance of the work completed by the Principal until the time limit specified in the contract.

Performance Bond

It is a guarantee for the Principal's ability to carry out / complete the work in accordance with a predetermined work contract.

Payment Bond

Other Derivative Collateral Related to the Master Contract such as: Down Payment Guarantee, Installation Sales Bond Guarantee, Heavy Equipment Rental Guarantee, Progress Payment Guarantee.

Apart from the types above, there are many other types that are also offered by Surety in order to achieve the interests of the Principal and Obligee in a project that is being worked on. In some types of Suretyship, the Principal is not the only person who works to build the project that the Obligee wants. For example, in a Supply Contract Bond, a Principal is a dealer of goods / Supplier, and in a Custom Bond, a Principal is an importer who is subject to an obligation to pay Import Duty. The existence of insurance in a project provides benefits for both the Principal and the Obligee.

The benefits of Suretyship for the Principal include that the Principal as the party who gets the job from the Obligee can obtain an agreement quickly, easily and at low cost if at any time they cannot work on the project that the Obligee wants within the time limit that has been determined and agreed upon by both parties. . Meanwhile, the benefit for the Obligee is that the insurer can guarantee the Obligee that the project they want will be completed on time according to the agreement. In addition, the Obligee can disburse the guarantee fee easily if the Principal is forced to not complete the promised project on time.
Aviva

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