More than black sunglasses — agreements and security

LG Leader September 2019

We are often asked about what security is appropriate in a situation, and I don’t mean how many people you need watching the door! When we talk about security, we mean how the council can be sure that if something goes wrong, it will be protected. At the end of the day, an agreement is only as good as the ability to ensure that the other party complies with its obligations.

There are a number of different ways that a council can get comfort that it will be protected if the other party is unable or unwilling to perform its obligations. The most common one is knowing that the other party is insured and that the insurance will respond to cover loss suffered by the council. Another well understood (if not always well implemented) option is a bank guarantee, which allows the council to draw on the bank guarantee if it suffers loss.

Other options being proposed by developers and contractors, such as insurance bonds, sureties and personal guarantees are also available.

All of these potential methods for securing the council’s interests have their merits, but it is worth ensuring that the underlying agreement between the parties matches the security which is being taken by the council, otherwise the council may be left exposed.

If you would like to discuss how you can ensure that your council is protected under a proposed arrangement, please contact us on 08 8113 7110.