Proving the Claim and the Records That Support It

Bond claims are decided on documents. The legal questions are usually narrow and the factual ones are usually arithmetic: what was supplied, whether it went into the bonded work, what it was worth, what has been paid and what is left. A claimant who can answer those four questions from contemporaneous records will be evaluated on the merits. One who cannot will be met with a request for documents and then with a denial for want of proof.

The four things that must be established

The first is that the claimant furnished labor or material. The second is that it was furnished in carrying out the work provided for in the bonded contract, which is a narrower proposition than having supplied something to a party who happened to be working on the project. The third is value: either the agreed price under the arrangement or, where no price was agreed, the reasonable value of what was supplied. The fourth is the unpaid balance after all payments and credits.

Each maps to a different set of records. Furnishing is proved by delivery tickets, daily reports, payroll records and time sheets. Connection to the bonded work is proved by the project identification appearing on orders and tickets, by site signatures, and by correspondence naming the project. Value is proved by the contract or purchase order and by invoices consistent with it. The balance is proved by a reconciled account rather than by a statement of the amount demanded.

The second element is the one claimants underestimate. Supplying goods to a contractor who was working on the project is not the same as supplying them for that project, and the difference becomes visible when a customer runs several jobs at once. Orders that name the project, tickets signed by someone at the site and job cost coding maintained in the ordinary course all establish the link. Where those are missing, the claimant is left arguing from inference about where fungible goods ended up.

The account and how it is presented

The most common defect in a submitted claim is a demand figure with no reconciliation behind it. A surety evaluating a claim needs to see the total charged, each payment received, the date of each payment and the invoices to which it was applied, any credits for returns or backcharges, and the resulting balance. Where payments were received without direction as to application, the claimant should record how they were applied and on what basis, since the application affects both the balance and the age of the outstanding charges.

Backcharges deserve separate treatment rather than netting. A claimant that quietly absorbs a disputed backcharge into the account loses the ability to contest it later and invites the argument that the reduced figure was agreed. Setting the charge out, stating the position on it and reserving the dispute preserves the point without obstructing evaluation of the rest.

Extras, changes and the volunteer problem

Work outside the original scope generates a large share of disputed balances. The bond secures payment for labor and material furnished in carrying out the contract, and a surety will resist charges that appear to have been undertaken without authority. Proof of authorization is therefore part of the claim: a signed change order, a written direction, or at minimum a contemporaneous record of the instruction and the party who gave it.

Where the parties proceeded informally, as often happens under schedule pressure, the claimant should assemble what exists rather than reconstruct what should have existed. Field directions, daily reports noting the instruction, emails confirming the request and the pattern of prior changes handled the same way are all admissible and are frequently sufficient. What does not work is an invoice for extras issued at the end of the job with no trace of the work having been directed.

A related trap is the invoice issued at a rate different from the one agreed. Where a claimant billed extras at a premium rate without a written basis for it, the surety will pay at the contract rate and litigate the difference. Establishing the rate at the time the work is directed, even by a short written confirmation, converts a contested valuation into an arithmetic one.

Waivers, releases and what they cost

Progress payments on construction projects are commonly exchanged for waivers and releases, and the documents signed along the way limit what may later be claimed. California prescribes statutory forms and provides that a waiver given in exchange for a progress payment is void unless it follows the prescribed form, which distinguishes a conditional release effective only on receipt of payment from an unconditional one. A claimant that signed unconditional releases for payments never received has created a serious obstacle to its own claim.

Two protective points follow. Conditional forms should be used wherever the payment has not cleared, and exceptions for disputed items and pending change orders should be listed rather than assumed. Under the federal statute a waiver of the right to sue on a required payment bond is void unless it is in writing, signed by the person whose right is waived, and executed after that person has furnished labor or material. Sureties nevertheless raise release arguments routinely, and how they are framed is set out in defenses the surety will raise. The related question of what a joint check settles is addressed in joint check arrangements and what they prove, and the records described here must be assembled before the period in the deadline to sue on a payment bond expires.