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A Better Partnership
October 18, 2013

Without language to the contrary, suretyship contracts limit liability to amount of performance bond

Because courts have traditionally interpreted performance bonds to limit surety liability to the amount of the bond, the Michigan Court of Appeals held that it will presume liability is limited to the amount of the bond unless plain contractual language to the contrary expresses an intent to expand liability.  In the consolidated case of Northline Excavating, Inc. v. County of Livingston, a public-sector contract required the contractor to obtain a performance bond from a surety under MCL 129.201.  The Court found that because there was no language clearly indicating an intent to expand liability under the bond, the surety’s liability was only limited to the amount of the bond.

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