General contractors require Performance and Payment bonds from their subcontractors. These bonds guarantee that the subcontractor will faithfully perform the subcontract according to its terms and pay bills for labor and material incurred because of the subcontracted work.
Some intermingling of responsibility exists in practically all construction and building operations under contract. The three major parties involved are the owner, the general contractor and the surety. Certain parts of a project or contract may include subcontractors as another party. General contractors almost never do all the work required in a large construction job. They sublet parts of the work to other contractors that specialize in trades such as plumbing, heating, drywall or plastering, electrical wiring, roofing, painting, landscaping and other component parts or elements of the overall construction contract. In most cases, the general contractor may not be familiar with or have the time, equipment or personnel to handle the entire contract. Some prime contractors have no employees or equipment at all. For this reason, they sublet all the work to subcontractors. Since subcontractors actually complete the job in many cases, Subcontract bonds are critical.