Utah Contractor Practice Exam

A payment bond guarantees that the bonding company will pay valid claims for unpaid bills owed by which party posting the bond?

1. Prime contractor or property owner

2. Prime contractor or subcontractor

3. Subcontractor or material supplier

4. Property owner or material supplier

The correct answer is: Prime contractor or property owner

A payment bond is a financial guarantee that ensures that valid claims made by subcontractors, suppliers, and laborers for unpaid bills will be paid by the bonding company. The party posting the bond, which is typically the prime contractor, guarantees payment to these parties. Therefore, the correct answer encompasses the roles of the prime contractor or the property owner, as the payment bond generally protects those providing materials and services in the construction process. This arrangement helps to ensure that all parties involved in the project can rely on being compensated for their work, thus promoting trust and stability within the construction industry. The bonding company steps in to fulfill payment obligations, which is especially critical in construction as numerous parties depend on receiving payment for labor and materials provided.