RATIFICATION AGREEMENT
This Ratification Agreement is made and entered as of the Effective Date by and between ______(“Surety”) and ______(“Subcontractor/Vendor”) (collectively, the “Parties”).
Recitals
- ______(“Contractor”) was awarded a Contract on or about ______(the “Contract”) by ______(“Obligee”) for the construction of ______(the “Project”).
- Subcontractor/Vendor entered into a written agreement with Contractor to perform work on and/or supply materials to the Project, which agreement is attached hereto as Exhibit A and incorporated by reference, together with the Contract and all amendments, general and special conditions, specifications, and drawings, each and all of which being additionally incorporated by reference, the entirety of said incorporated documents being referred to hereinafter as the “Subcontract/Purchase Order” (the Subcontract/Purchase Order and this ratification agreement shall hereafter be referred to collectively as the “Agreement”).
- Surety issued a Performance Bond (the “Performance Bond”) and a Payment Bond (the “Payment Bond”), both numbered ______and each in the penal sum of ______, in connection with the Project naming Principal as principal and Obligee as obligee (collectively, the “Bonds”).
- Contractor’s right to proceed with Contract work has been terminated and Surety may undertake or has undertaken to complete performance of the work required under the Contract.
- Surety may agree to complete the Project by retaining the services of a completion contractor and may, in its sole discretion, choose to utilize Subcontractor/Vendor to complete its performance under this Agreement.
- Subcontractor/Vendor has made or may make demand upon Contractor and/or Surety for payment.
- Subcontractor/Vendor represents that the account between Subcontractor/Vendor and Contractor under the Subcontract/Purchase Order is accurately set forth as follows:
a / Original Subcontract/Purchase Order amount: / $
b / Approved change orders: / $
c / Adjusted Subcontract/Purchase Order amount: / $
d / Value of Completed Work/delivered materials per Obligee: / $
e / Retainage (___ %): / $
f / Completed Work Less Retainage (Line d minus Line e): / $
g / Amount paid by Contractor: / $
h / Amount paid by Surety: / $
i / Amount paid by Obligee: / $
j / Amount currently due [f minus (g + h + i)]: / $
k / Value of work not performed (c minus d): / $
l / Total Currently Payable: / $
In consideration of the agreements and undertakings set forth below and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties agree as follows:
Agreements
1. Subcontractor/Vendor does hereby ratify and reaffirm its Subcontract/Purchase Order, including all applicable warranties, and, if directed by Surety or its assignee, shall complete said Subcontract/Purchase Order in accordance with the terms and provisions thereof. Subcontractor/Vendor understands and agrees that it will be bound to Surety in accordance with this Agreement. Notwithstanding any conflicting terms in the Subcontract/Purchase Order, the Subcontractor/Vendor shall not terminate this Agreement, or cease work on the Project, without first giving Surety written notice of a default and a reasonable opportunity (not less than 15 days) to cure.
2. This Agreement may be assigned by Surety to a completion contractor without the consent of Subcontractor/Vendor. Notice of any such assignment will be provided to Subcontractor/Vendor.
3. Subcontractor/Vendor represents that Surety’s payment of the Total Currently Payable [line (l) above] constitutes full payment for its performance under the Subcontract/Purchase Order through the date of this Agreement. Surety agrees to pay the Total Currently Payable within seven (7) calendar days of the execution of this Agreement. The remaining sum, identified in line item (k) above, shall be paid in accordance with this Agreement.
4. Subcontractor/Vendor agrees that, in consideration for payment of the Total Currently Payable [line (l)], it hereby releases and forever discharges Surety from any and all claims, damages, liabilities, fees, expenses, or other amounts claimed payable for all labor, material, or services provided pursuant to the Subcontract/Purchase Order through the date of this Agreement and, furthermore, that it assigns to Surety, to the extent of payment made hereunder, its claims against Contractor and Obligee under the Subcontract/Purchase Order including, without limitation, its lien rights, stop notice rights, and causes of action.
5. All rights, claims, and defenses of Surety against Subcontractor/Vendor in connection with defective work and/or materials furnished by Subcontractor/Vendor are specifically reserved, including the right to request that Subcontractor/Vendor rectify any defects pursuant to the terms of this Agreement and/or to recover from Subcontractor/Vendor for any defective work or materials any sums paid to Subcontractor/Vendor by Contractor, Surety, or Obligee.
6. If this Agreement is assigned to a completion contractor, Surety will pay to Subcontractor/Vendor, when due, the retainage amount set forth in line (e). Obligee’s release to Surety of Subcontractor/Vendor’s earned retention shall be an express condition precedent to the obligation of Surety, or its assignee, to pay said earned retention to Subcontractor/Vendor.
7. Subcontractor/Vendor guarantees the work performed and/or materials furnished or to be performed or furnished against defects in materials or workmanship for the period of time set forth in this Agreement, and will make replacements, repairs, and/or corrections thereto as required in accordance with this Agreement. The costs associated with warranty claims and correcting defective work shall remain the sole responsibility of Subcontractor/Vendor.
8. To the extent that a payment provided for under this Agreement is for materials furnished by Subcontractor/Vendor in connection with the Project but not yet incorporated into the Project, Subcontractor/Vendor will not be entitled to payment under this Agreement until it has furnished a detailed, verifiable inventory of the nature of the materials for which payment is sought, including the quantity and condition of the materials, and satisfactory documents evidencing insurance covering the stored materials and the transfer of title to the materials to Obligee. To the extent any materials have not been delivered to the Project, Subcontractor/Vendor agrees to deliver any such materials promptly upon receipt of payment of the Total Currently Payable [line (l)]) from Surety.
9. Subcontractor/Vendor will commence work under this Agreement within seven (7) calendar days after written request by Surety or its assignee. Subcontractor/Vendor shall coordinate and attain substantial completion of its work in accordance with this Agreement.
10. Subcontractor/Vendor agrees to retain and preserve all original correspondence, documents, books, and records pertaining to the Project and further agrees to forward to Surety, or its assignee, all working drawings, shop drawings, plans, and information corresponding to any work completed or materials furnished through the date of this Agreement by Subcontractor/Vendor, promptly upon receipt of payment hereunder.
11. Except as modified herein, the Parties reserve all rights, remedies and defenses they may have against any person or legal entity not a signatory hereto, including but not limited to suppliers, subcontractors, owners, engineers, architects, and other contractors or subcontractors on this or other projects. Nothing contained in this Agreement is intended to create any rights or remedies in favor of, or otherwise in any manner to inure to the benefit of, any person or legal entity not a signatory hereto.
12. Subcontractor/Vendor agrees that all amounts paid or to be paid hereunder are paid to Subcontractor/Vendor on the express representation that every person, firm, or corporation employed by or furnishing materials, labor, or services to Subcontractor/Vendor, in connection with this Agreement, has been fully paid, except those persons, firms, or corporations specifically identified in Exhibit B, if any, with the amount due them from Subcontractor/Vendor set forth opposite their names. Subcontractor/Vendor agrees that all monies received pursuant to this Agreement will be treated as trust funds and used to pay all persons who have furnished labor, materials, or equipment at Subcontractor/Vendor’s request and further agrees to obtain proper releases for any amounts paid by Contractor or Surety for labor, materials, or equipment provided by any employees or lower-tier subcontractors, suppliers, or vendors of Subcontractor/Vendor. Subcontractor/Vendor agrees to indemnify and hold harmless Surety from any claims filed by any such persons or entities in connection with this Agreement, including all costs, expenses, and attorneys’ fees incidental thereto.
13. Subcontractor/Vendor shall continuously maintain insurance in the amounts and types required by the terms of this Agreement. Subcontractor/Vendor shall cause Surety and its assignee to be named as additional insureds on all of said policies, proof of which shall be required prior to commencement of work. Subcontractor/Vendor shall also ensure that its payment and performance bonds are amended by their surety to add Surety and its assignee as additional obligees thereunder, proof of which is required prior to commencement of the work.
14. The Effective Date of this Agreement is the date of the last signature below.
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SUBCONTRACTOR/VENDOR
By:
Its:
Date:
Tax ID:
SURETY
By:
Its:
Date:
______
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