Friday, October 23, 2009
Why Performance Bonds are Important
Behind the Scenes at Taylor Studios: "First, what are performance and payment bonds? A bond is a three party agreement between the owner (e.g. a museum), the contractor (e.g. Taylor Studios), and a surety company (e.g. Travelers Casualty Insurety Company). The surety company assures the owner that the contractor will perform the contract. A performance bond protects the owner from financial loss should the contractor fail to perform. A payment bond assures the contractor will pay its employees, subcontractors, and vendors. Often these are combined in one bond."
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2 comments:
Though theatre productions probably don't have the 30% failure rate that construction projects do, we still see bonds popping up. I know USA has some provisions with bonding in its contracts and significant financial penalties for theatres that have not paid contracts. I suspect that on production contracts, there are more regulations since not all of their shows open or run for the expected amount of time.
The bonds might not apply to a theatrical production as a whole since they're often self-financining as opposed to being done on contract to someone else, but I can certainly understand wanting a performance bond on a contract to build a set for a show, as mentioned in the article it would protect the producers of the show from a scenery company taking the contract and not finishing (at worst they wouldn't have to pay or could get a partial refund) and it would also to some extent protect the scenery company from the production company folding.
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