Most of the construction contracts require general contractor to obtain a performance bond in order to protect the owner in the event that the contractor defaults and cannot, or will not, complete its contractual obligation. Many general contractors obtain performance bonds for some of the key subcontractors. Once a claim is made under the performance bond, it is an unlikely scenario that the surety will immediately take over the contractor's responsibilities or pay another replacement contractor in order to complete the project.

A performance bond surety's obligations are controlled by the specific terms of the bond. Just because a contractor or subcontractor has wholly failed to perform does not mean that the surety is automatically obligated to take over the bonded contractor's work. While the conditions of the bond are tied to the underlying construction contract, most bonds contain conditions that must independently be fulfilled before the surety becomes obligated to perform. A potential claimant on a performance bond needs to read and understand those actions necessary to perfect its rights under the bond. If a condition precedent is not satisfied or excused, the surety may be excused from its obligations or liability under the terms of the bond.