Definitions for performance bond
This page provides all possible meanings and translations of the word performance bond
performance bond, surety bond(noun)
a bond given to protect the recipient against loss in case the terms of a contract are not filled; a surety company assumes liability for nonperformance
A contractor's bond, guaranteeing that the contractor will perform the contract and providing that, in the event of default, the surety may complete the contract or pay damages up to the bond limit.
A performance bond is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. A job requiring a payment & performance bond will usually require a bid bond, to bid the job. When the job is awarded to the winning bid, a payment and performance bond will then be required as a security to the job completion. For example, a contractor may cause a performance bond to be issued in favor of a client for whom the contractor is constructing a building. If the contractor fails to construct the building according to the specifications laid out by the contract, the client is guaranteed compensation for any monetary loss up to the amount of the performance bond. Performance bonds are commonly used in the construction and development of real property, where an owner or investor may require the developer to assure that contractors or project managers procure such bonds in order to guarantee that the value of the work will not be lost in the case of an unfortunate event. In other cases, a performance bond may be requested to be issued in other large contracts besides civil construction projects.
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