performance bond

(redirected from Construction bond)
Also found in: Dictionary, Thesaurus, Encyclopedia.
Related to Construction bond: performance bond, Contract Bonds

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.

Performance Bond

A bond that a company issues to another guaranteeing repayment in case some project fails. For example, suppose a company hires a construction firm to build an apartment building. The construction firm may issue a performance bond to the company. If the apartment building is not constructed according to specifications, the company will not incur any losses because the construction company must repay the bond. This reduces the risk to the bondholder that another party to a contract will not fulfill its obligations.

performance bond

An insurance policy often required on government construction projects.If the contractor does not perform the work it contracted to do, the insurance company will either hire someone else to complete the job or will pay off the resulting damages, up to policy limits. Sometimes it is inaccurately called a performance and completion bond. Technically, liability under a performance bond is contingent on the contracting party paying according to the terms of its construction contract.Contrast with completion bond,where the contracting party does not have to pay anything to the insurance company,even though it might have been obligated to pay the contractor. As a result, most bonds are performance bonds and it is very difficult to obtain a completion bond.

Mentioned in ?
References in periodicals archive ?
Sakaiya made these remarks in reference to moves among senior LDP legislators to revise the fiscal law, which limits the use of the proceeds from construction bonds to public works projects.
EDS: UPDATING WITH LDP HEAVYWEIGHT NONAKA'S NEWS CONFERENCE REMARKS) Prime Minister Yoshiro Mori on Friday indicated his qualified support for a ruling Liberal Democratic Party (LDP) plan to change the law to allow the use of construction bonds to fund outlays on projects other than public works.
Abe said, 'We would carry out necessary public investment and have the BOJ purchase construction bonds to forcibly put money in the market.
On how to raise extra money for the package, Finance Minister Hirohisa Fujii, meanwhile, told reporters in Tokyo that the government may issue construction bonds.
3, the state high court agreed that Regent is a "pervasively sectarian" institution, but held construction bonds are not a form of direct government aid.
UMB Corporate Trust & Escrow Services, a division of UMB Financial Corporation (NASDAQ: UMBF), leads the Missouri and Midwestern markets as one of the first agents to be selected for all three bond types created by The American Recovery and Reinvestment Act of 2009: Build America Bonds, Qualified School Construction Bonds, and Recovery Zone Economic Development Bonds.
99 trillion yen worth of construction bonds to finance the budget, avoiding the issuance of deficit-covering bonds for the first time in four years.
New Jersey Economic Development Authority (NJ) school facilities construction bonds series 2006 R-1;
We would like to finance projects to lay down fiber optic cables, construction of barrier-free facilities, and other projects that we have not so far been allowed to finance with construction bonds,'' Yoshio Yatsu, who chairs the panel, said.
8 million in additional construction bonds six years ahead of schedule.
The bonds are secured by an assignment of the lease, sublease, sublease guarantees and leasehold mortgage to the trustee, a security interest in the construction fund, mortgage title policies, an assignment of the construction bonds and an assignment of the agency agreement.
6 billion in right-of-way acquisition and bridge construction bonds.

Full browser ?