Opinion ID: 6345768
Heading Depth: 2
Heading Rank: 1

Heading: The Terms of the Performance Bond

Text: The question at the heart of this appeal is whether section 3 of the bond, which sets forth a series of preconditions for Arch's obligation to act on behalf of RCM, applies to Graphic's window warranty claim. In relevant part, section 3 states: §3 If there is no [Contractor][7] Default under the [Subcontract], the Surety's obligation under th[e] Bond shall arise after: Graphic also brought a claim under Massachusetts's unfair 6 business practices statute that it does not pursue on appeal. See Mass. Gen. Laws ch. 93A, §§ 2, 11. The performance bond identifies Graphic as Owner, but 7 provides in section 15 that, if the bond covers an agreement between a contractor and subcontractor, the term Contractor in this Bond shall be deemed to be Subcontractor and the term Owner shall be deemed to be Contractor. Thus, we have replaced the term Owner in section 3 with Contractor, Construction - 8 - .1 the [Contractor] first provides notice to the [Subcontractor] and the Surety that the [Contractor] is considering declaring a [Subcontractor] default. Such notice shall indicate whether the [Contractor] is requesting a conference among the [Contractor], [Subcontractor] and Surety to discuss the [Subcontractor]'s performance . . . . .2 the [Contractor] declares a [Subcontractor] Default, terminates the [Subcontract] and notifies the Surety; and .3 the [Contractor] has agreed to pay the Balance of the [Subcontract] Price in accordance with the terms of the [Subcontract] to the Surety or to a contractor selected to perform the [Subcontract]. Under section 5 of the bond, [w]hen the [Contractor] has satisfied the conditions of Section 3, the surety must take one of several specified actions at its own expense. These include arranging for the original subcontractor to complete the job; taking over completion of the work through its agents or independent contractors; arranging for a new subcontractor acceptable to the contractor; or, in lieu of completing the work, determining the amount for which it may be liable and making that payment to the contractor. As described below, Graphic also invokes section 1 of the bond, which states in full: The [Subcontractor] and Surety, Contract with Subcontract, and Contractor with Subcontractor. - 9 - jointly and severally, bind themselves, their heirs, executors, administrators, successors, and assigns to the [Contractor] for the performance of the [Subcontract], which is incorporated herein by reference.