March 21, 2018

Labour & Material Bonds: What They Are, What’s Changed And What You Should Consider

The Supreme Court of Canada has changed the obligations on labour & material bonds. Here’s what you need to know.

What are labour and material bonds?

A Labour and Material bond is typically associated with large construction projects, where it ensures that the subcontractors and suppliers will be paid (up to the bond limit) and reduces both the risk of interruption to the construction work and liens being filed on the project.

What’s changed?

Following a recent Supreme Court of Canada decision (Valard Construction v. Bird Construction Company), there is now an obligation on the owner or general contractor of a construction project to take reasonable steps to proactively inform claimants of the existence of a labour and material bond.

What you should consider

If you are concerned about the safeguards to put in place, your rights, how to amend the terms of the bond and what obligations you may be under as a trustee of a bond, please contact one of our Litigation Group specialists. We will be happy to offer our expertise in guiding you through the uncertainty of the new rule changes and the risk of litigation that follows it.