A STEP IN THE RIGHT DIRECTION

摘要

In the current climate, ensuring there are sufficient funds to complete a project is a critical consideration for contractors. This is particularly the case with the increasing use of shell companies, which are often joint ventures that embark on developments funded by third parties. The only asset of the shell company is likely to be the land it is developing - although it may not even have this - and any profit it will make on the forward sale or letting of the development, once built out. The funder of such a development will be looking for security and protection in the event that the developer is not able to complete the project. The contractor will be looking for reassurance that it will be paid, and the use of advance payment bonds has been on the increase as "money in the bank" to cover one or maybe two valuations. At the other end of the scale are the parent company guarantees and performance bonds that are linked to claims for damages rather than the completion of a job. There is, however, another potentially more comprehensive solution: "step-in" rights.