Surety Bonds

Import/Export of Goods and the Import Surety Bond

For clients operating in the field of importation and/or exportation of goods, insurance, surety and risk management solutions for supply chain and transportation intermediaries are the items of primary focus. A customs import surety bond is a contract used for guaranteeing that a specific obligation will be fulfilled between customs and an importer for any given import transaction. The main purpose of a customs bond is to guarantee the payment of import duties and taxes.

A customs bond is required on all commercial imports entering the US. Merchandise will not clear customs without a properly executed bond, and according to US customs regulations, a surety bonds purpose is “to protect the revenue of the US and to assure compliance with any pertinent law, regulation or instruction.”

The importer agrees to certain conditions upon posting a bond, including agreement to pay duties, taxes and charges in a timely manner, to make or complete entry of goods, to produce documents and evidence of the shipment, and to redeliver merchandise if required or requested. This also includes agreement to rectify non-compliance with provision for admission, to allow examination of any and all merchandise and reimbursement and exoneration of the US where necessary, including compliance with any special requirements on duty free entries.

 

How and when are Drawback Bonds implemented?

Whenever merchandise is imported into, or exported out of the US, a principal may be entitled to a refund of duty, what is commonly referred to as a drawback claim. There are several types of drawback claims and methods of payment, including accelerated drawback, which is the most common way to be paid. With accelerated drawback, the refund is granted before liquidation of the drawback claim. A drawback bond guarantees full repayment to US Customs Border Protection (CBP) of overpaid drawback as determined by liquidation of the drawback claim.

There are many different types of bonds, depending upon the quantity and type of transactions involved. A commonly used import surety bond is a “Single Entry Bond” that can only be used once for a particular transaction. A “Continuous Bond” can be used for an annual period and will cover all transactions within that year. They can both be used at any port of entry. Brokers should help clients determine which is the more practical solution in any given situation.

Surety Bonds Performance and Payment

If you have hired a contractor to construct a building for you, then you are most likely looking forward to completion—assuming that everything goes as planned. But problems can and do happen; if the company you’ve hired goes into bankruptcy or some kind of accident occurs, it’s possible that your project will never be finished. All the money that you’ve invested up to that point might be wasted, and to add insult to injury you won’t be able to use the building. Surety bonds performance and payment plans help ensure that either this doesn’t happen, or that you’ll be protected if it does.

Bond Description

A surety bond is an agreement that guarantees a certain task will be completed. The buyer agrees to purchase the bond, and the insurance provider agrees to ensure the contractors will complete their work. If the provider is unable to get the construction company to finish the project, then they compensate the client for the investment that they’ve made.

Reasons to Purchase

Should you consider getting a bond? It’s probably a good idea to purchase a bond if you doubt for any reason that the contractor will be unable to finish their work. This might be the case if the construction company seems to be financially unsound, or if your property is subject to certain issues like natural disasters that can put a stop to the work. Surety bonds performance and payment plans are common for most large projects because of the protection they provide.

 

photo credit: National Board of Advisors Meeting February 2010 (license)

NJ Surety Bonds Add Value

For contractors and other business professionals needing NJ surety bonds, they can open up a lot of opportunities that would not be available without securing a bond. Clients like to feel protected when entering into business contracts with companies, and since the nature of surety bonds is to protect people from fraudulent and unethical businesses, bonded companies reassure people that they’re making the right choice.

 

The list of people and businesses that are required to be licensed and bonded in the state of New Jersey includes plumbers, electricians, HVAC contractors, public adjusters and public officials, to name a few. This is required if they plan on working on residential homes. The goal of these bonds are to protect the public by ensuring each principle will conduct business professionally, abide by local ordinances and hold the state and county government entities harmless in the event they cannot fulfill their obligations.

 

Performance, bid, and payment bonds are essential bonds

 

Bid Bonds – This is where the process begins; bid bonds are needed during the project bidding process. Most public and many private construction projects require all contractors guarantee their work and will honor their bid or proposal.

 

Performance Bonds – This is the next step in the contract awarding process and basically guarantees the owner that the contractor (or sub contractors) on the project will complete the project according to the agreed terms. If either party defaults, the third party or surety will see the agreement through to an acceptable resolution.

 

Payment Bonds – Finally, with a payment bond, the owner of the contract guarantees that subcontractors and suppliers will all be paid the monies agreed upon in the contract, even in the event that the principle fails to pay those same subcontractors and suppliers directly.

 

An array of surety bonds is available in New Jersey

 

There are many different types of businesses in the state required to secure a NJ surety bond. Check local and state rules and regulations regarding bonding to see what kinds are necessary. Even if a business doesn’t have to be bonded, it is an important consideration as it provides an extra layer of protection. It also helps to be bonded because customers will feel more confident about doing business with a bonded individual or company.

photo credit: JD Hancock cc