5.10 Bonds have long been a controversial part of the construction process. The Secretary of State for the Environment announced in a speech last November that the DOE would prepare guidelines to apply throughout Government on the use of bonds. He was critical of on-demand bonds, as are the CIEC. Bonds are intended to be a protection against failure or poor performance. As this DOE work is in progress, I do not need to duplicate it. But I believe that the DOE's guidance on bonds should be formulated within these principles:-

1. They should be drafted in comprehensible and modern language.

2. They should not be on-demand and unconditional, but should have clearly defined circumstances set out in them for being called.

3. If the circumstances /conditions provided for in the bond are fulfilled, the beneficiary should be able to obtain prompt payment without recourse to litigation.

4. They should have a clear end date.