In the construction industry, parties to general agreements of indemnity (commonly known as GAIs) once thought these agreements gave sureties unlimited discretion and protection in settling bond claims.  Parties should not think this way anymore.  Earlier this year, the Connecticut Supreme Court ruled that a surety is only protected when it settles a claim in good faith, despite specific language commonly found in GAIs.  This decision is sound, and is likely to be adopted in other jurisdictions. A surety’s right to indemnification is not absolute, but instead, is subject to review by the trier of fact.

Click here to read the article

This article was co-authored with Nicole E. Liguori.