or changing any of the terms of the contract, or plans and specifications, without the consent of the surety, which would allow the surety to claim that the contract had in consequence thereof been made more difficult for its principal to perform. To avoid this, the contract should be so drawn as to provide for the modification of the contract without consent of the surety. Bid Bonds Bid bonds are sometimes used in place of certified checks. A surety company writing the bond guarantees that if the principal on the bond (the bidder) is awarded the contract, it will execute the final contract bond guaranteeing the completion of the contract according to plans and specifications. The liability of a surety company, if for any reason it fails to carry out the obligation of its bid bond to execute the final bond, is the difference between the bid of the principal on the bid bond and that of the next responsible contractor to whom the award is subsequently made. Bid or proposal bonds for construction contracts of $2,500 or more carry a nominal premium of $5 each. The premium on the bid bond is credited to the premium cost of the final bond on the successful contractor to whom the award is made. Maintenance Bonds Maintenance bonds are only required whenever the thing constructed, erected, manufactured, or sold has, according to the terms of the contract, to be maintained or kept in good condition for a definite period of time. They are required by an owner to guarantee work performed by the contractor. They vary in term from one to two or more years, according to the character of the work. Premium rates on maintenance bonds vary in accordance with the terms of maintenance. No premium is charged if the maintenance is charged in the general contract bond and does not extend over a period of twelve months. If separate maintenance bonds are required, a premium rate is charged for the full maintenance period, payable in advance and based upon the amount of the bond. Lien Bonds One form of lien bond is a separate bond that does not guarantee completion of work but guarantees the owner, lender, mortgagee, or lessee against any liens being filed on the building or improvements. Another form is one filed by a general contractor or subcontractor for money claimed to be due for work done and unpaid. Such action necessitates a court proceeding to determine the rights of the respective parties. Premium rates covering lien bonds vary according to the states in which the bond is required, because of the difference in the state lien laws. Bonds to Discharge Liens Bonds discharging liens are filed by the party against whom claim is made by the lienor, either the owner or the general contractor, in order to relieve the lien, pending court proceeding. The lien laws in the different states vary considerably, and a contractor should familiarize himself with the rights of material-men and labor prior to beginning work in the states in which the contract is to be performed. Premium rates covering bonds to discharge liens vary according to the states in which the bond is required because of the difference in state lien laws. License Bonds Contractor's sidewalk bonds are required by municipal ordinance. They do not guarantee a contract nor the perform ance of work awarded. They guarantee that all work will be done in accordance with law or ordinance and indemnity against damages to person or property. Bonds Covering Workmen's Compensation and Employer's Liability Acts Bonds are issued to the state or state authorities as security, indemnity, or guarantee for the payment of workmen's compensation or employer's liability or as evidence of an employer's financial responsibility or ability to pay employees' claims. Bonds can be obtained by a contractor indemnifying, guaranteeing, and protecting him from claims for workmen's compensation, disabilities, or death under the workmen's compensation or employer's liability acts resulting from the work of subcontractors. Financial Guarantee for Delayed Payments Bonds are issued indemnifying public officers for payment of the retained percentage on construction contracts when payment is withheld on account of litigation, tests, or other causes. The premium is based on a percentage of the penalty of the bond. Delivery of Freight and Freight Charges Bonds are issued to guarantee the payment of freight charges. General indemnity bonds are written in favor of railroad, steamship, and transportation companies covering: 1. The delivery of freight, without a bill of lading. 2. Diversion or stoppage of freight. 3. The running of freight cars into warehouses, sidings, or premises of the consignee, without a bill of lading. Some indemnity bonds are written covering the delivery of a special consignment of carload goods when bill of lading is not surrendered. Lenders' or Lessors' Bonds Bonds can be written in favor of or consigning to lessors, lenders, mortgagees, owners, or others guaranteeing the construction or completion of a building or improvement. CHAPTER VII THE CONTRACTOR'S EQUIPMENT Investment in Equipment An important factor in the proper and economical prosecution of construction work is the equipment the contractor owns, rents, or purchases. The immediate availability of the equipment is an aid in avoiding delays on jobs. The sum a contractor should invest permanently in equipment depends upon the volume and character of the work performed by him and the capital in the business. A contract for new work might involve the purchase of additional equipment. The contractor, however, might find upon its completion that his so-called "profit" is represented by second-hand equipment; the sum of its salvage value and the payments received from the owner might be less than his cash outlay for wages and materials, etc. Classes of Equipment A large variety of equipment is needed in carrying out construction work. Different types of construction require different kinds of equipment. Some work calls for the use of small locomotives, cars and tracks, teams, wagons, etc.; other work requires hoisting engines, derricks, concrete mixers, surveying instruments, cableways, locomotive cranes, auto trucks, etc. Construction work necessitates the purchase also of lumber and timber for scaffolding, shoring, runways, temporary bridges, etc., and great numbers of smaller tools, such as wheelbarrows, steel blocks, chains, wire rope, shovels, pick |