Legal alert… A reminder: bonds in lieu of retentions

The Construction Contacts (Retention Money) Amendment Bill (Bill) passed its first reading on August 6, 2021. It is currently with the Select Committee with a report due on November 25, 2021. The Bill will strengthen and clarify the retentions regime under the Construction Contracts Act 2002 (Act). However, not all retentions are held by way of money in a trust account. This article looks at another mechanism for retentions – a contractor giving a bond in lieu of retentions and the advantages of doing so.