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Home Q & A Board Humanities Legal Studies
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DcoleWanna DcoleWanna
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6 years ago
Guaranty. A. J. Kellos Construction Co was the general contractor for the construction of a building in Georgia. Kellos entered into a subcontract with Roofing Specialists,. Inc, to build the roof. Balboa Insurance Co executed a bond in favor of Kellos, underwriting Roofing Specialists' performance of its contract. When the state architect condemned the roofing, Kellos sued Balboa on the bond for damages resulting from Roofing Specialists' default on the contract. Was Balboa's bond in favor of Kellos an insurance contract or a guaranty contract?
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#1
6 years ago
Guaranty
The bond executed by Balboa was not a contract of liability insurance. Instead, the case presents three parties in a contract for a guaranty. Roofing Specialists was the obligor in that it promised to construct the roof. Kellos was the obligee because the promise was made to it. And Balboa was the guarantor in that payment of the bond was contingent on the default of the obligor. Kellos was allowed to recover from Balboa Insurance Co.
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