Retention Bond

By December 16, 2021No Comments

A form of surety provided by a contractor so as to avoid deductions (retentions) being made from the milestone payments under a construction contract. Thus rather than receiving 90% of a stage payment due to him when a milestone is passed (with the other 10% being payable at completion of the project), a contractor receives 100% of the milestone payment but provides a 10% retention bond against the eventuality that the project is not completed (most likely because of the contractor’s failure).