Performance Bond

Performance Bond

A Performance Bond is a financial guarantee issued by a bank or insurer to ensure a project is completed per contract terms, safeguarding the project owner from potential losses if the contractor defaults.

Definition:
A financial guarantee

Entities Involved:

• Bank
• Insurer
• Contractor
• Project Owner

Key Components:

• Guarantee completion
• Protection from losses
• Compliance with contract terms

Examples:

• Construction projects
• Engineering contracts
• Government tenders