Article 2 Obligations of the principal insurer

The principal insurer, being the sole manager of the risk, including the subcontracted element, shall undertake:

1. (a)

   to guarantee the principal contractor, in respect only of the latter's part of the contract, against the risks defined by him in each individual agreement;

2. (b)

   not to accept any modification to any of the terms of performance of the contract (amount, delivery, payment, etc.) or to the contract between the principal contractor and the subcontractors) for the performance of that contract, unless mutually agreed with the joint insurers);

3. (c)

   not to disclaim liability under the provisions of the policy issued to the principal contractor in consequence of any default on the latter's part, without notifying the joint insurer(s) thereof;

4. (d)

   not to declare that the policy has lapsed without notifying the joint insurers) thereof;

5. (e)

   to notify to the joint insurer(s) any fact which comes to his knowledge and which might alter the nature or extent of the risk or lead to a loss;

6. (f)

   in the event of loss or threat of loss, to consult the joint insurers) on the steps to be taken; decisions to acknowledge a loss shall, so far as possible, be taken by mutual agreement, the amount of the indemnity and the method of payment being fixed in accordance with the provisions of each policy;

7. (g)

   in the event of a loss, to take the necessary steps or require the principal contractor to take the necessary steps to recover amounts unpaid and to pay back to the joint insurer the portion owed to the latter out of the sums recovered and to complete any necessary formalities for transferring such portion. The costs incurred in recovery by the principal insurer shall be divided between the insurers in proportion to the share of the contract covered;

8. (h)

   in the event of cancellation of the guarantee given to the principal contractor, to use his best endeavours to meet the obligations set out in this Article.