Surety Not Required to Mitigate Damages

Kegler Brown Construction Newsletter

In a case favorable to bonding companies and unfavorable to contractors or subcontractors providing bonds, the Court of Appeals for Hamilton County held that a surety had no obligation to mitigate its principal's damages under an indemnity agreement by attempting to collect payment for work performed prior to the principal/contractor's default. Four Seasons Environmental v. Westfield (1994), 93 Ohio App.3d 157.

This case gives bonding companies considerable latitude in deciding what action to take or not when a contractor defaults, while still retaining the ability to recoup its loss from the contractor and its owners who signed the indemnity agreement.