(i) Bid Bond
This is a bond given to people (Clients) who want to tender for projects. The Bond guarantees the owner of the project (Principal) that the Bidder will remain in the bidding process until the project (Contract) is awarded. When the contract is awarded and the guaranteed person does not win the contract, the bid bond becomes void. In the event where the bidder wins the contract, the guarantor ensures that the bidder signs the contract to perform. Failure by the bidder to sign the contract the guarantor is called upon to pay the bond value guaranteed.
(ii) Performance Bond
This bond is granted to persons who have been awarded contracts to execute. It is a guarantee to the principal on behalf of the contractor up to the bond value that the contractor will perform the project awarded him according to specifications and within the given time. Should the contractor default in the performance of the said contract, the value on the bond will be due for payment, where the contract is successfully completed the bond becomes is discharged or vitiated.
(iii) Advance Mobilization
This guarantee is given out to contractors only when the principal wishes to advance an amount of money to the contractor to mobilize resources to work on the project. The bond is an undertaking to the owner of the project to refund monies advanced to the contractor to mobilize resources to work on the project should the contractor after collecting the mobilization fund default in the performance of the project. If however the contractor utilizes the money in the performance of the project successfully then the bond becomes void.
B. CUSTOMS BOND
(I) Transit Bond
This is a guarantee given to clients who are transporting imported goods for which duties have not been paid from a stated point in the country to
a point of exit to a neighbouring country. The bond is an affirmation to CEPS that the insurance company guarantees to pay the duty on the goods, should the client fail to transport the imported goods outside the country but sells them leading to the loss of duty to the state. If the goods are successfully carried to their destination then the bond becomes void.
This bond is granted to clients who bring in imported goods to use in the Country during their visits and are obliged to send them back, and therefore do not pay taxes on them. The bond is a guarantee for the duty payable on the item, should the visitor fail to send the item back or are sold and the duty is lost to the State, then the bond pays the taxes to CEPS.
This bond is also issued to clients who want to re-export imported goods to another Country. The bond guarantees up to the duty payable on the goods should the client fail to re-export the goods and it is discovered that they were sold in the country.
(iii) Exportation Bond
This guarantee is given to clients who want to export locally produced goods to other countries. The bond is a guarantee to CEPS up to the sales tax duty payable on the goods should the client fail to export the goods and it is discovered that the goods have been sold in the country and the duty is lost to the State. The bond becomes void when the goods are duly exported to their destination country.
(iv Warehouse Bond
This bond is granted to Companies or individual importers who have requested to be allowed to put their imported goods, on which duties have not been paid, at their warehouses and to pay the duty later. The bond guarantees to pay CEPS up to the bond value, should the Company or individual default in the payment of duty of the goods.
(v) Removal Bond
This bond guarantees the Company or an individual to pay to Customs Excise and Preventive Service up to the bond value, should the goods being removed from one destination to another fail to be delivered at the final destination leading to the loss of duty to the State.
(vi) Customs Agent Bond
This bond is granted to Clearing Agents. The bond is a guarantee to CEPS on behalf of the clearing agent to pay an amount up to the bond value should the misconduct of the Clearing Agent in the course of his duties result in the loss of customs duty to the State.
Underwriting Consideration/Rating Factors
a. History of Similar Business/Contracts dealt with and the level of success, that is, the history of participation in that particular business.
b. Certificates of Incorporation and Certificate to Commence business
c. Names of Directors and top Management
d. Names of Solicitors and Bankers
e. Collateral Security, preferably immovable property comprehensively insured with forced failed valued equal to the bond sum required.