Performance Bond

Performance Bond

A bond issued to one party of a contract as a guarantee against the failure of the other party to meet obligations specified in the contract.

Notes:

For example, a contractor may issue a bond to a client for whom a building is being constructed. 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.

See also: Bankers' Acceptance, Bank Guarantee, Bond, GIC

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Performance bond

A surety bond between two parties, insuring one party against loss if the terms of a contract are not fulfilled. Usually part of a construction contract or supply agreement.