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bid bond |
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Bid bond A bid "performance" bond consisting of a small percentage (1-3%) of the tender contract price, refunded to losers once the contract is awarded. Bid Bond A bond that a bidder to a construction project buys to guarantee that it has the means to complete the project should it be awarded the contract. The amount of a bid bond is a certain percentage of the price of the contract. It exists to reassure the company awarding the contract that the bidder has the cash flow needed for the project. The bidder is reimbursed for the bid bond if it does not receive the contract. bid bond A type of bond required in some government construction projects.If required,it must be filed at the same time as the bid.This protects the agency in the event the bidder fails or refuses to enter into a contract after being offered it or withdraws the bid before the award.The bonding company will then pay the agency the difference between the defaulting low bid and the next highest bid,whose bidder will be given the contract. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| There are three bonds a contractor wants to qualify for: first, the bid bond, in effect "insurance" that the company is suitable to bid on a particular job; second, the payment bond, with which the bonding entity (insurer) backs up the contractor's promise to pay employees, subcontractors and suppliers; and third, the performance bond, which commits the insurer to getting the job done if the contractor can't. For example, a bid bond may not typically be required by a camp facility, as it only provides a guaranty that the contractor will accept his bid if awarded. Association members produce about 70% of the bid bonds in the United States. |
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