fund control agreement

An arrangement employing an independent third party to disburse the construction funds to the various trade contractors and suppliers on a given project, often mistakenly believed to be a viable alternative guarantee to a contract bond. Marshaling the contract funds and disbursing them pursuant to approved payment requests mitigates the possibility of a payment bond type claim. It does not, however, guarantee that the project will be built per plans, on time, within budget, and that all bills will be paid.