Retention Money Guarantee

Retention Money Guarantee

A Retention Money Guarantee ensures the buyer pays the retained portion of the contract sum to the contractor upon satisfactory project completion or defect rectification.

Main Components:

• Function: Protects against non-payment.
• Trigger: Satisfactory project completion or rectified defects.
• Parties Involved: Buyer, Contractor, Guarantee Issuer (e.g., Banks, Insurance Companies).
• Retention Money: Typically 5-10% of the contract sum.

Example Scenarios:

• Construction Projects: Completion of structural work without defects.
• Service Contracts: Fulfillment of service quality standards.

Entities:

• Banks (e.g., JPMorgan Chase, Bank of America)
• Insurance Companies (e.g., AIG, Allianz)
• Contractors (e.g., Bechtel, Fluor)

Assessment:

• Project inspection.
• Quality audits.
• Certification by designated authorities.