Agreement to Bond
An agreement to bond — the same document your tender may call a consent of surety, a surety consent letter or a bid letter — is the surety’s undertaking that your final bonds will be issued on award. A bid bond does not do that, and the difference is not a technicality.
What Is an Agreement to Bond?
The Surety Association of Canada defines it precisely: “A consent of surety is also commonly referred to as an agreement to bond. It is a legal commitment, but it is not a true bond as it is only executed by the surety, not the contractor.” It confirms to the owner that if the contractor is awarded the job and executes the contract, the surety will provide the performance and payment bonds on the terms set out in the document.
The names are interchangeable, and which one you meet depends on who is buying. Calgary’s tender forms are headed Consent of Surety to Furnish Bonding. Vancouver asks for a Consent of Surety. Winnipeg uses a combined Bid Bond and Agreement to Bond. The Royal Architectural Institute of Canada records the same three names. Brokers add surety’s consent and surety consent letter. They are all one instrument, and nothing turns on which term your solicitation happens to use.
That the surety signs and the contractor does not explains everything else about it. There is no principal and no penal sum running against the contractor. It is a unilateral undertaking, usually in the form of a letter, and the owner can enforce it directly against the surety.
What an agreement to bond is not:
- It is not a bond, and it does not guarantee that the contractor will sign the contract or hold its price
- It is not bid security — it secures the availability of the final bonds, not the bid itself
- It is not a standard form; there is no CCDC or Surety Association of Canada version, so the wording is whatever the owner specifies or the surety writes
- It is not a letter of intent, which is not a surety product at all, and it is not a prequalification letter, which binds nobody
- It is not open-ended — it lapses at the end of its validity period, commonly sixty days from bid closing
The Gap It Closes
Why a Bid Bond Is Not Enough
This is the single most misunderstood point in Canadian tendering, and it is stated plainly in the Royal Architectural Institute of Canada’s handbook of practice: bid bonds do not ensure that a surety will provide the necessary performance bond once the bid is accepted.
You can see why in the bid bond form itself. The condition is that the principal gives such bonds as the bid documents specify from a surety — not from this surety. The bid bond company has undertaken to cover the bid differential if you walk away. It has not undertaken to write your performance bond.
What the Bid Bond Actually Does
If the low bidder fails to enter into the contract, the bid bond surety pays the difference between that bid and the replacement contract, capped at the bond amount — commonly ten per cent of the bid. Its job is to protect the owner from having to re-tender at a higher price, and it ends there. More on our bid bonds page.
What the Agreement to Bond Adds
A separate, direct undertaking from the surety to the owner that the final bonds will be issued on award. Because the surety executes it, the owner has a claim against the surety on the undertaking itself. That is what the Surety Association of Canada means by calling it a legal commitment.
Why Owners Ask for Both
The two secure different risks. One protects the owner against a bidder that withdraws; the other protects it against a bidder that cannot produce bonds at award. A contractor who submits only one where the tender required both has filed a non-compliant bid, and the usual result is disqualification rather than a request for clarification.
Where It Sits in the Sequence
A prequalification letter binds nobody and belongs at the qualification stage. A bid bond binds the contractor and the surety to the bid. An agreement to bond binds the surety to issue the final bonds. The performance and payment bonds themselves come after award.
Worth noting because it appears on more than one Canadian broker website: statements that a bid bond guarantees the surety will issue the performance bond are simply wrong, and they contradict both the handbook of practice and the text of the bond forms. If a bid bond did that, agreements to bond would not exist.
Get These Right
What the Document Has to Say
Because there is no standard form, every agreement to bond is drafted either to the owner’s specification or on the surety’s letterhead. Six things have to line up with the tender documents, and any one of them wrong makes the submission non-compliant.
The Obligee, Named Exactly
Not approximately. Nova Scotia Public Works requires “His Majesty the King in Right of the Province of Nova Scotia as Represented by the Minister of Nova Scotia Department of Public Works”. Federal bonds run to His Majesty the King in right of Canada. A misnamed obligee is a rejectable defect, and it is the easiest one to avoid.
The Project, Identified
The contract or solicitation reference exactly as it appears in the bid documents. A surety’s undertaking is given for a specific project on specific terms; a vague description invites a dispute about what was actually promised.
The Right Percentages
Federal and most provincial work runs at fifty per cent for both the performance and the payment bond. Municipalities frequently require one hundred per cent performance with fifty per cent payment, and some ask for one hundred per cent of both. An undertaking promising fifty where the documents demand one hundred is non-compliant on its face.
The Validity Period
Sixty calendar days from bid closing is the baseline in the 2024 CCDC bid bond, the Nova Scotia bid bond and the federal form 504, applying where the bid documents are silent. Individual owners — municipalities in particular — sometimes specify ninety days or longer. The tender documents always govern.
The Conditions
Sureties reserve on the final contract terms and the bond forms. Those reservations are what the surety can actually rely on if it later declines, so read them rather than assuming the undertaking is unconditional.
The Corporate Seal
In the common law provinces a seal is required, and the Surety Association of Canada advises specifically that documents submitted at the tender stage be both signed and sealed, noting that tenders are regularly rejected for want of one. Quebec is the exception, because the Civil Code does not require a seal.
For Contractors
What It Costs You and What It Buys
No Separate Charge
Tender-stage documents are issued under your existing surety facility, and Canadian brokers consistently report no separate premium for them. The annual facility administration fee covers their issuance; premium attaches to the bonds themselves after award.
But It Is Still Underwritten
The surety assesses the undertaking against the same single-project and aggregate limits that govern the final bonds, and in light of the work you already have on hand. A contractor close to its ceiling, or with several bids pending at once, can be declined at tender stage.
Give the Surety the Documents
Sureties reserve expressly on the contract terms and the bond forms. Send the tender package and the actual bond forms the owner intends to use, not a summary. An undertaking given before the forms are reviewed can be refused at award, which is the worst possible moment to find out.
For Owners and Consultants
What You Are Actually Holding
A Direct Claim Against the Surety
Because the surety executes the undertaking, you have recourse against it if the bonds are not forthcoming on award. That is the practical difference between an agreement to bond and a prequalification letter, which binds nobody at all.
Ask for It at the Right Stage
The Surety Association of Canada steers owners toward a prequalification letter at the qualification stage and an agreement to bond at tender. Asking for a binding undertaking before contract terms exist produces heavily qualified wording, or a refusal.
Specify What You Want
With no standard form, whatever you put in the tender documents is what you get. Set out the bonds, the percentages, the validity period and the form to be used. Owners who leave it open receive undertakings drafted entirely to the surety’s advantage.
Where It Is Required
Bid Security Across the Jurisdictions You Bid In
Whether you need an agreement to bond, and what has to accompany it, depends on who is buying. These are the regimes an Atlantic contractor is most likely to meet.
Nova Scotia — Over $500,000
Under the province’s public sector construction contract guidelines, bonding is the recommended form of bid and contract security on contracts of five hundred thousand dollars or more. This is the tier where an agreement to bond is routinely part of the submission.
Nova Scotia — $100,000 to $500,000
Security may be bonds on the contracting authority’s prescribed forms, irrevocable standby letters of credit, money orders, certified cheques or bank drafts. Where a cash instrument is used for the bid, an agreement to bond is what tells the owner the final bonds will actually be available.
Nova Scotia — Under $100,000
Bid security may be required, and contract security is provided by the successful bidder only, after selection and before signing. Separately, where a bidder subcontracts two hundred and fifty thousand dollars or more, the subcontractor should be required to provide contract security to the bidder.
Federal Work
The federal bid bond form requires the contractor to provide a performance bond and a labour and material payment bond each at fifty per cent of the contract price, with a sixty-day acceptance period where the solicitation is silent. Bid security requirements are set by the solicitation and the standard acquisition clauses, so read the specific call.
Ontario Public Contracts
Section 85.1 of the Construction Act requires performance and labour and material payment bonds of at least fifty per cent of the contract price on public contracts of five hundred thousand dollars or more, using prescribed Forms 32 and 31. It does not apply where the procurement commenced before 1 July 2018.
Private and Institutional Owners
Entirely a matter of the contract documents. Percentages vary more widely here than anywhere else, and proprietary or amended bond forms are common — which is exactly the situation in which a surety will want to see the forms before undertaking anything.
One local point worth knowing before you assemble a Nova Scotia submission: the province publishes bid, payment, performance and maintenance bond forms, and no agreement to bond or consent of surety form at all. Where one is required, the wording comes from the solicitation or from your surety.
Name the Form
Which Bonds, on Which Form, in Which Edition
An agreement to bond is a promise to issue a specific document. If the document is not identified precisely, the promise is worth considerably less than it looks — and 2024 made that materially more likely.
The 2024 CCDC Forms
- CCDC 220, 221 and 222 were reissued on 21 May 2024, replacing editions that had stood for twenty-two years
- CCDC 221 went from roughly one page to thirteen, with a structured notice regime, pre-notice meetings and fixed response deadlines
- CCDC 222 removed the old ninety-day restriction on advancing claims and added defined response timelines
- “CCDC 221” now means two very different documents, so an agreement to bond should name the edition it is undertaking to provide
And the Forms That Are Not CCDC
- Nova Scotia Public Works uses forms based on the Surety Association of Canada 2021 wording, though it also accepts CCDC bid bonds
- Ontario public contracts use prescribed Forms 31 and 32, which differ materially from the CCDC forms
- Federal work uses the PWGSC 504, 505 and 506 forms
- Many private and institutional owners use proprietary or amended wording that no surety has seen before
The practical instruction is short. Send your surety the actual bond forms the owner intends to use, before the undertaking is issued. An agreement to bond promising CCDC forms on a Nova Scotia Public Works job is promising the wrong document, and finding that out at award is a problem with no good solutions left.
Avoid These
Where Agreements to Bond Go Wrong
None of these are underwriting problems. They are all administrative, they all happen at the tender desk, and they all cost the bid rather than the project.
The pattern is the same in every case: the document was produced quickly, against a deadline, without anyone comparing it line by line to what the solicitation actually asked for.
Submitting the Wrong Instrument
An agreement to bond is not bid security, and a bid bond is not an undertaking to issue final bonds. Substituting one for the other produces a non-compliant bid. So does omitting a required consent of surety, which is a documented cause of disqualification.
The Validity Period Lapses
Sixty days is the default, and slow procurements routinely run past it. Confirm the period the owner actually specified, diarise it, and ask for an extension before it expires rather than after.
Percentages Do Not Match
Fifty-fifty federally and provincially, one hundred per cent performance at many municipalities. Copying last year’s letter forward is how a fifty per cent undertaking ends up attached to a hundred per cent requirement.
The Surety Never Saw the Forms
The most avoidable failure of the lot. Sureties reserve on bond forms explicitly, so an undertaking given before the actual forms were reviewed can be declined at award, when the contractor is already committed to the owner.
Scope or Price Changes at Award
A surety can step back where new and significant information has emerged between bid and award. A materially changed scope, a negotiated price well below the bid, or a deterioration in the contractor’s position all qualify.
Format Non-Compliance
A growing rejection ground. Where the owner requires digital bonds, scanned PDFs and unverifiable documents are not accepted. Check the format requirement at the same time you check the wording.
All of it comes back to the same thing: the surety is being asked to commit in advance, and it will only commit to what it has actually seen. Send the tender documents and the bond forms early, ask for the undertaking with time to spare, and read the finished document against the solicitation before it goes in the envelope. The same facility supports your bid bonds, performance bonds and payment bonds, so the conversation is one conversation.
Agreement to Bond and Consent of Surety FAQs
What is an agreement to bond?
An agreement to bond is a written undertaking from a surety to a project owner that, if the contractor is awarded the contract and executes it, the surety will issue the performance and labour and material payment bonds on the terms stated. The Surety Association of Canada describes it as a legal commitment, but not a true bond, because it is executed by the surety alone and not by the contractor.
Is an agreement to bond the same as a consent of surety?
Yes. Consent of surety, agreement to bond and bid letter are all names for the same instrument in Canadian practice, and the Surety Association of Canada uses the first two interchangeably in a single sentence. No jurisdiction prescribes one term as the formal name, and there is no standard form.
Is a surety consent letter the same thing?
Yes. Surety consent letter, consent of surety, surety’s consent, agreement to bond and bid letter all describe the same instrument in Canadian practice, and the Surety Association of Canada uses the first two interchangeably in a single sentence. Which term you meet is a matter of regional habit rather than substance — Calgary and Vancouver tender forms say consent of surety, Winnipeg says agreement to bond. Read the wording of the document you are being asked for, not its title.
Does the surety have to consent to release of holdback or final payment?
Not in Canada. There is no Canadian equivalent of the American consent-to-final-payment form, and no CCDC document of that kind exists. Holdback release here runs on the statutory process — certification, the lien period expiring and statutory declarations — with notice to the bonding company rather than its consent. Where a surety’s agreement genuinely is sought after award, it is for material changes to the contract, not for payment.
If I have a bid bond, why do I need an agreement to bond?
Because a bid bond does not commit the surety to issue the final bonds. Its condition is that the contractor provides the specified bonds from a surety, and its exposure is the difference between your bid and the replacement contract. The Royal Architectural Institute of Canada states directly that bid bonds do not ensure a surety will provide the performance bond once the bid is accepted. The agreement to bond is what closes that gap.
Is an agreement to bond bid security?
No. It secures the availability of the final bonds, not the bid. Owners that want the bid itself secured require a bid bond or a cash instrument — a certified cheque, bank draft, money order or irrevocable letter of credit — and frequently ask for an agreement to bond in addition.
How long does an agreement to bond stay valid?
Sixty calendar days from bid closing is the baseline. That is the fallback in the 2024 CCDC bid bond, the Nova Scotia bid bond and the federal form 504 where the bid documents are silent. Individual owners, particularly municipalities, sometimes specify ninety days or longer, and the tender documents always govern. On a slow procurement, ask for an extension before it lapses.
What does an agreement to bond cost?
There is normally no separate charge. Tender-stage documents are issued under your existing surety facility, and Canadian brokers consistently report that the annual facility administration fee covers them. Premium attaches to the performance and payment bonds issued after award.
Can the surety back out after issuing one?
It is a commitment, and a surety would only step back where new and significant information has emerged between bid and award — a material change in the contractor’s financial position or workload, a substantially altered scope or price, or contract terms and bond forms different from those it reviewed. Note that what the surety may actually rely on is the conditions written into its own letter, so those conditions are worth reading closely.
What percentages should the agreement to bond state?
Whatever the contract documents require. Federal work and most provincial work runs at fifty per cent for both the performance bond and the payment bond. Municipalities commonly require one hundred per cent performance with fifty per cent payment, and some require one hundred per cent of both. An undertaking that does not match the solicitation is non-compliant on its face.
Does Nova Scotia publish an agreement to bond form?
No. Nova Scotia Public Works publishes bid, payment, performance and contract maintenance bond forms, and nothing for a consent of surety. Its forms are based on the Surety Association of Canada 2021 wording rather than CCDC, although CCDC bid bonds are accepted. The obligee must be named exactly as the department specifies.
How is this different from a prequalification letter?
A prequalification letter is expressly non-binding and belongs at the Request for Qualification stage. An agreement to bond is a commitment and belongs with the tender. The Surety Association of Canada actively steers owners toward the letter early, because a binding undertaking given before contract terms exist amounts to a blind guarantee.
How much notice does my surety need?
More than most contractors give. The surety wants the tender package and the actual bond forms before it commits, and if you do not already hold a facility the underwriting has to be done first. Four to six weeks ahead of a bid deadline is comfortable; a day or two is only realistic on an established facility for a familiar owner and a familiar form.
