Performance bond

A financial guarantee, provided by a bonding company, that the contractor will perform as set out in the contract. If the contractor does not meet its performance obligations as set out in the contract, then the purchaser can access the bond and have the surety (the third-party bonding company) step in to assist. Generally associated with construction projects, performance bonds can also be useful in other contracting scenarios where performance and project completion are critical success factors. 

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