Contract Bonds
This type of bond guarantees the performance of the terms and specifications of a contract.
Contract bonds consist of three parties:
1) Principal: the party (contractor) who agrees to perform/fulfill the obligation
2) Obligee/Owner: the party for whose benefit the bond is written
3) Surety: the party who issues the bond for a premium
There are several types of contract bonds:
Bid Bond – guarantees that if the bidder is awarded the contract, the bidder will accept the contract and provide the obligee with a performance and payment bond.
Performance Bond – guarantees that the principal will perform the contract according to the contract price and specifications.
Payment Bond – guarantees that the principal will pay the laborers, suppliers, and subcontractors used to perform the contract.
Maintenance Bond – guarantees that the principal will maintain the equipment and/or products which were installed per the contract.
Supply Bond – guarantees that the principal will supply the goods and services per the contract.
Contract bonds consist of three parties:
1) Principal: the party (contractor) who agrees to perform/fulfill the obligation
2) Obligee/Owner: the party for whose benefit the bond is written
3) Surety: the party who issues the bond for a premium
There are several types of contract bonds:
Bid Bond – guarantees that if the bidder is awarded the contract, the bidder will accept the contract and provide the obligee with a performance and payment bond.
Performance Bond – guarantees that the principal will perform the contract according to the contract price and specifications.
Payment Bond – guarantees that the principal will pay the laborers, suppliers, and subcontractors used to perform the contract.
Maintenance Bond – guarantees that the principal will maintain the equipment and/or products which were installed per the contract.
Supply Bond – guarantees that the principal will supply the goods and services per the contract.