Performance bonds are used to guarantee that a project will be
performed according to the terms and conditions of a contract and
provide remedy to the employer in the form of cash damages in the
event of default by the contractor and that act of default causing
the Employer to suffer a loss.
A performance bond ensures payment of a sum (not exceeding a
stated maximum) of money in case the contractor fails in the full
performance of the contract. These bonds usually cover 100 percent
of the contract price and replace the bid bonds on award of the
contract. Unlike a fidelity bond, a performance bond is not an
insurance policy and (if cashed by the principal) the payment
amount is recovered by the guarantor from the contractor.
Generally default will be caused by the insolvency of the
contractor. The types of bonds available include:
- Advance Payment Bond
- Retention Bond
- Deferred Payment Guarantee
- Rent Guarantee
- Reinstatement Bonds
- Court Bonds
- Supplier Payment Guarantee
Call us for more details on the range of bonds available.
