A Texas appeals court ruled that a performance bond remains part of a public works contract even after the contractor is terminated, as long as the surety still has obligations. The county had one year from when the bond's obligations fully ended—not from when the contractor was fired—to sue the surety. This means sureties cannot escape liability by arguing the contract ended just because the contractor was removed from the job.
Performance bonds stay active beyond contractor termination. The one-year lawsuit deadline doesn't start until the surety's obligations completely end, not when the contractor is fired.
Bonds incorporated by reference into contracts are enforceable. Make sure your subcontract clearly states which bonds and documents are included so there's no dispute later.
Document when bond obligations actually end. Keep records of final inspections, punch-list completion, and warranty periods to establish when the surety's duties truly cease.