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Foreign direct investment and private capital flows are highly concentrated geographically, with almost half of them reaching five top destinations. These flows tend to evade many high-risk countries. Regulatory and contractual risks, particularly in infrastructure, have inhibited investments in many parts of the developing world. A core objective of the World Bank Group (WBG) has been to support the flow of private investment for development; guarantees and insurance have been among the instruments that the WBG has used to pursue this objective. This study examines three main questions: • Should the WBG be in the guarantee business? • Have guarantee instruments in the three WBG institutions been used to their potential as reflected in WBG expectations and perceived demand? • Is the WBG appropriately organized to deliver its range of guarantee products in an effective and efficient manner?

Jurisdiction, Venue, and Forum In Key Construction, Inc. v. Western Surety Co.,6 a subcontractor default on a project in Washington resulted in a project-wide shut down.7 The prime contractor brought suit in Kansas state court under the subcontract's forum-selection clause, which provided that to the extent the contractor did not elect arbitration, the \"Eighteenth Judicial District, District Court Sedgwick County, Kansas is the court of exclusive jurisdiction and venue\" to resolve disputes between the prime contractor and subcontractor.8 The surety removed to federal court and sought transfer to Washington.9 The prime contractor moved to remand back to Kansas state court.10 The court denied both motions.11 As to the motion to transfer, the court explained that the balance of factors did not strongly favor transfer as required under precedent.12 The court noted that the prime contractor's choice of forum and court congestion weighed against transfer, whereas conflict of laws and allowing a local court to decide localized issues favored transfer.13 In denying the motion to remand, the court explained that the subcontract only applied to disputes with the subcontractor, and that the performance bond did not specify that the surety assumed all obligations undertaken in the subcontract.14 In Jackson Contractor Group, Inc. v. Travelers Casualty & Surety Co. of America,15 a subcontractor ceased working on an Idaho project.16 The prime contractor sued the subcontractor's performance bond surety in federal court in Washington.17 The surety moved to dismiss under the performance bond's forum-selection clause, which designated Idaho.18 The surety also moved to transfer to federal court in Idaho on forum non conveniens grounds.19 The prime contractor argued that the forum-selection clause was void ab initio under a Washington statute that provides that insurance contracts may not \"depri[ve] the courts of this state of the jurisdiction of action against the insurer\" and that venue transfer was inappropriate as private and public interest factors weighed in favor of staying in Washington.20 The court denied the surety's motion, explaining that the forum-selection clause was void ab initio because the performance bond was subject to Washington law as it was signed in Washington, work was partially performed in Washington, and the prime contractor and subcontractor were located in Washington.21 The court further explained that transfer was inappropriate because relevant witnesses were located in Washington.22 3. Conditions Precedent In Sterling & Wilson Solar Solutions, Inc. v. Fidelity & Deposit Co. of Maryland,23 a prime contractor default-terminated a subcontract and sent the subcontractor's performance bond sureties written notice in which it advised the sureties that the subcontractor had \"defaulted\" on the subcontract.24 The notice further advised the sureties that the notice was being provided pursuant to section 3 of the AIA A312-2010 performance bond.25 The sureties lost the notice and did not respond, and the prime contractor obtained a completion contractor and filed suit against the sureties.26 The sureties moved for summary judgment, arguing that the notice failed to satisfy the express conditions precedent of section 3, which required pre-termination notice and a post-termination agreement to pay the balance of the subcontract price.27 In denying the sureties' motion, the court held that violation of a notice requirement exonerates a surety only to the extent of resulting prejudice even when notice is an express condition precedent to liability.28 4. \"34 The court found that the contracts could not be district contracts absent the district's inclusion as a party.35 Therefore, the court held that the liquidated damages clauses were unenforceable penalties under Texas law.36 In Apex Development Co. v. Rhode Island Department of Transportation,37 after substantial completion of an interstate highway project a property owner sued the DOT, claiming trespass and damage to property during construction.38 The DOT sought to enforce the contract's indemnification claim against the prime contractor's sureties.39 The sureties argued that the bond only applied to direct construction costs and that their obligations were conditioned on the prime contractor's default and notice to the sureties.40 The supreme court affirmed summary judgment in favor of the sureties, finding the performance bond was null and void without a declaration of default and notice.41 The court further held that it would be unreasonable to extend liability to the sureties where the failure to provide notice prevented them from intervening to minimize their liability for damages.42 In E&I Global Energy Services, Inc. v. United States,43 after prime contractor's termination on a federal project the performance bond sureties retained a completion contractor under a contract in which the sureties were responsible for paying pre-default debts owed to subcontractors and suppliers.44 The completion contractor had difficulty retaining subcontractors and suppliers and paid some of prime contractor's outstanding debts to retain their performance.45 The completion contract was terminated for default for untimely performance.46 The completion contractor sued the government seeking damages and a conversion of the termination to a termination for convenience. On appeal, the Federal Circuit concluded that the factual allegations were sufficient to support the completion contractor's theory of excusable delay.47 The court explained that the sureties' failure to pay subcontractors and suppliers could constitute an adequate excuse for delay if it substantially impaired the completion contractor's performance.48 The court further explained that the sureties' alleged failures and the government's failure to enforce the sureties' payment obligations could also constitute an adequate excuse for delay under federal law.49 In U.S. Specialty Insurance Co. v. Trawick Contractors, Inc.,50 following a subcontractor default, its surety filed a declaratory judgment action against the prime contractor who counterclaimed for completion costs.51 After discovery, the surety issued payment to the prime contractor that excluded legal and consulting expenses.52 The surety then moved for summary judgment, arguing that it was not obligated for such costs because the performance bond did not reference legal or consulting fees and did not otherwise incorporate the subcontract by reference.53 The court denied the surety's motion, explaining that the subcontract and bond must be \"read together\" because the bond described the subcontract and the work required thereunder, and the subcontract required the bond at issue.54 The court then found that the subcontract and bond, as read together, required the surety to reimburse the prime contractor for legal and consulting expenses up to the penal sum of the bond.55 5.

Objective: The purpose of this research is to learn the differences between the “Surety Agreement” and the “Guarantee Agreement”, which are often confused in collateral law.   Method: The research method used in this study was based on finding the general result to be obtained after comparing the opinions of academics with court decisions based on domestic legal rules in Turkey.   Results and Discussion: In contracts established in commercial and social life, there are remedies such as \"Surety Agreement\" or \"Guarantee Agreement\" to eliminate or significantly reduce the risk of the debtor's inability to pay the debt. It has been concluded that the Guarantee Agreement provides a stronger guarantee than the Surety Agreement, is established by a different contract from the articles of association, the creditor has the right to apply directly to the guarantor in the articles of association, and in case of hesitation, he has the right to apply to the guarantor. there is a practice and consensus on this issue before the Turkish courts and academics.   Research Implications: The information and documents that can be used in this research have been obtained completely from open sources. all of the quoted information is written in the footnotes and bibliography section.   Originality/Value: The novelty of this research is that it explains the reasons for using the “Bank Guarantee Letter”, the most well-known example of which is due to the fact that the Guarantee Agreement provides more effective protection to the creditor party in the field of collateral law.

The contractor defaulted the manufacturer, corrected the work, and filed a claim against the performance bond without terminating the manufacturer.10 The surety denied the claim because the contractor failed to terminate, then filed suit seeking declaratory judgment, and moved for summary judgment.11 In response, the contractor argued that the bond's condition precedent did not apply to the defective work or obligation to furnish a manufacturer warranty, and that the contractor was otherwise prevented from terminating the manufacturer because the modular structure had been delivered and installed.12 The First Circuit rejected the contractor's arguments, emphasizing that the warranty claim arose from the failure to procure a warranty before completion of the subcontract (and not a demand for remediation under a warranty).13 The court explained that the performance bond's terms did not exclude this warranty obligation from the conditions precedent and that the surety's performance options were \"no less suitable for the warranty obligation than for the physical work of fixing the [underlying work]. The contractor immediately notified the surety of the termination, but claimed that it was forced to continue work on the project while the surety performed its investigation.20 The contractor sued the principal and surety for breach of the performance bond, contending that the surety had not paid the contractor's claim.21 The court granted the surety's motion for summary judgment and denied the contractor's motion for summary judgment on the breach of the performance bond count.22 In so granting, the court reasoned that it was undisputed that the contractor began self-performing upon notifying the surety of its bond claim, which foreclosed upon the surety's bargained-for right to have a reasonable period of time within which to select a remedial option.23 4. Proper Claimants In Hanis County Water Control it Improvement District No. 89 v. Philadelphia Indemnity Insurance CoŅ the Fifth Circuit considered whether a prime contractor could assert claims against a subcontractor's performance bond when the bonded subcontract had been changed without notice to the subcontractor's surety.25 The surety asserted that the undisclosed changes represented a new independent contract that happened to embrace the same subject matter as the bonded subcontract.26 The court rejected the surety's argument, holding that the objective intent of the undisclosed changes was to amend and not replace the underlying subcontract.27 The court explained that changed terms were described as a revised version of the bonded subcontract and contained the same section number, the same title, and the same subject matter as the bonded subcontract.28 5. The district court granted the surety's motion for summary judgment under the statute of limitations.30 The Eighth Circuit affirmed, holding that the public corporation could not invoke the doctrine of nullum tempus [\"time does not run against the king\"] because its claims arose from private-law theories that constituted proprietary rights, not the rights of the public.31 The court emphasized that the public corporation did not sue to enforce statutes or regulations, and a victory would not allow it to exercise any sovereign right.32 In Transit Wireless, LLC v. Fiber-Span, Inc.,11 although the prime contractor raised technical concerns about nodes installed on a project, which were partially addressed through retrofitting, the contractor used the nodes for nearly three years.34 The contractor later demanded that the subcontractor replace the retrofitted nodes and, upon refusal, sued the subcontractor and its performance bond surety.35 The subcontractor petitioned for bankruptcy.36 The bankruptcy court dismissed the contractor's claim against the surety, reasoning that the claim was untimely under the contractual two-year statute-of-limitations period because suit was filed more than two years after the contractor accepted the nodes though use.37 The district court reversed the bankruptcy court's decision, emphasizing that use of nonconforming goods is not acceptance in every case and that the contractor's use was reasonable under the circumstances.38 On appeal, the Third Circuit vacated the district court's opinion in part and concluded that the contractor's claim was untimely.3Q The contractual statute-of-limitations was dependent on delivery and not acceptance.40 The term \"delivery\" had been interpreted under the UCC to constitute tender of goods, regardless of their conformity.41 The court adopted this definition, noting that it was consistent with a commonsense understanding and was not dependent on some uncertain moment when the prime contractor might actually choose to accept the good.42 In Shallow Water Equipment, LLC v. Pontchartrain Partners, l.LCT the subcontractor argued that the discovery rule deferring the accrual of a cause of action until a plaintiff knew or should have known of the facts giving rise to a cause of action applied to Miller Act claims, rendering the subcontractor's claims timely.44 The court determined that the subcontractor's claim against the performance bond filed three months after the Miller Act limitations period had expired was untimely.45 Even if the discovery rule applied, the subcontractor's claim was still untimely because the subcontractor failed to exercise reasonable diligence in inspecting the vessel post-completion, where it would have discovered the damage to the vessel a year before the subcontractor filed its claim for said damage.46 In Southway Builders, Inc. v. United States Surety Co.,47 a prime contractor defaulted a subcontractor for untimely performance and asserted a claim against the subcontractor's performance bond.48 The contractor subsequently entered into a memorandum of understanding with the subcontractor's sureties to ensure that work continued while the sureties investigated the claim.49 The memorandum of understanding amended the bond's choice-of-law provision from Maryland to Virginia law.50 When the contractor failed to file a lawsuit within the bond's contractual oneyear limitations period, the sureties denied the prime contractor's claim, filed suit seeking declaratory judgment, and moved for summary judgment under the limitations period.51 The contractor argued that the contractual limitations period was void ab initio under Maryland law when the performance bond was signed, and, therefore, the memorandum of understanding's choice-of-law provision could not resurrect the void limitations period under more lenient Virginia law.52 The trial court granted the sureties' motion, holding that the limitations period was subject to and enforceable under Virginia law.55 On appeal, the Supreme Court of Virginia affirmed on different grounds, explaining that the bond's alternative saving provision provided for the minimum period of limitations under Virginia law.54 Surety contracts are construed as insurance contracts under Virginia law, and, therefore, the bond was subject to the one-year minimum limitations period required for insurance contracts and not the default five-year limitation period for causes arising in contract.55 6.

Defenses In VEC, Inc. v. Joyce Electrical, Inc.,20 a contractor sought to enforce a master subcontract agreement that was executed nine weeks after the subcontractor had commenced work. 21 The subcontractor and its surety asserted the agreement was void and unenforceable.22 The court found a genuine issue of material fact as to the existence of consideration for, and thus the enforceability of, the agreement.23 The subcontractor and surety also sought declaratory relief limiting the claim for liquidated damages.24 The court denied the motion, finding that the subcontract \"holds a subcontractor liable for delay damages in the same way that the [c]ontractor may be liable to the owner\" and \"does not purport to limit the contractor's potential recovery from a subcontractor to exclusively those damages. After a bench trial, the court found that the contractor was in default because \"it failed to provide the upper floors of the site available for installation (free of current debris and protrusions into the window openings),\" which was a material term of the bonded contract.29 In LeChase Construction Services, LLC v. Argonaut Insurance Co.,30 the surety moved for summary judgment on a performance bond claim because it was not brought within one year from the date of default as mandated by the language of the performance bond.31 Under New York law, \"to the extent that provisions of a surety bond issued by a compensated surety are ambiguous, courts construe them against the surety. \"34 Since the term \"default\" was not defined in the performance bond, \"it cannot be said that there is no dispute [principal] was in default under the terms of the contract at that point,\" and the court denied the surety's motion for summary judgment.35 In E&I Global Energy Services, Inv. v. Liberty Mutual Insurance Co.,36 the court found the surety not liable for claims of fraud and negligent misrepresentation brought by a completion contractor who executed a completion contract lower than its initial bid. \"47 In Grand Medford Estates, LLC v. Town of Brookhaven,48 two developers sought release of a cash deposit and performance bond, which were posted to guarantee performance of civil and highway improvements associated with the development of separate subdivisions.49 The developers argued that the town imposed additional, unlawful requirements beyond the scope of the guarantees as conditions precedent to release the bonds.50 The court granted the town's motion to dismiss, first holding that the developers' takings claim was not ripe because the developers did not plead that they properly applied to the town to release the bonds and further failed to allege that the town acted malicious or in bad faith.51 The court then held that the developers' due process challenge was not meritorious, because the code and New York law affords the town discretion in determining when and whether to release a developer from a performance bond, and that the release of the bonds is governed by New York contractual law, not constitutional law.52 The court further dismissed the developers' equal protection claim, because they failed to allege an official policy adopted by the town that authorized the town to selectively impose additional requirements on developers before the bonds could be released.53 In Bakken Contracting, LLC v. Venue at Werner Park, LLC,54 the court denied a developer's motion for summary judgment against a performance bond surety.55 The developer argued that the surety breached the performance bond with respect to defective and nonconforming plumbing work.56 The surety argued that, because the developer and contractor disagree about whether nonconforming products were installed, there has been no determination that the contractor failed to perform under the bonded contract.57 Additionally, the developer offered no evidence that it has already