CONTRACTS AND SURETIES.

Auckland Star, Volume XLIII, Issue 59, 8 March 1912, Page 9

CONTRACTS AND SURETIES.

A PECULIAR POSITION. A communication came before the City Council last night from Messrs. John Burns and Co, contractors, in connection with the Waitakere -water supply operations. The firm pointed out that one of the conditions of contract was that a deposit of £2OOO- should aeeompany the tender. The sbcbh schedule of the Municipal Corporations" Act, however, provided that a bond should be given for the due performance of such a contract. This bond the Council insisted on, and was duly given with approved sureties, so that the Council now had both bond and deposit. It seemed to the firm, ran the letter, that the £2OOO, which was really only an additional security for the due- performanee of their contract, should be so placed a» to give the firm the benefit of any interest it might produce. It was suggested, therefore that the sum should be praced in deposit, and' that on completion of the contract, principal and interest should be paid to them. As an alternative H was suggested that the Coaneil itself should use the money, paying the firm afterwards such a rate of interest as the Council paid to investors on short date loans. Failing these two courses, it was further suggested that the £2OOO be returned upon the giving of a separate bond for the amount, with aproved sureties. The ■Waterworks Engine*" (Mr. J Carlaw), in reporting on the letter, pointed out that Messrs. Boms and Co. tendered farter the speelftsntions- and conditions. Clawse 24 of fh*la£Ber stipu; lated a cash deposit of £9OOO, returnable only after the engineer had certaned to the satisfactory completion of the work. Clause 2* provided for a bond of £2OOO, in addition to the deposit. "In making up my estimate," wrote Mr. Cartaw, "I allowed, interest at 4 per cent on the £2OOO deposit for 18 months, and I feel sure a business firm like Messrs. Barns and Co. would do the same; if so the Council, by refunding the deposit, and substituting bondsmen, or paying in. terest as on short bonds, would be payins twice over. I would recommend that the specifications and general conditions he adhered to.

ilr. Bntrican expressed the opinion that as a principle the Council should not lock up £2OOO of any man'e mone-s if he found S'pprove'd sureties. He moved the matter be referred to .the Fhiance Committee for further consideration, which course wit adopted.