Performance Bond (Noun)
Meaning
A bond given to protect the recipient against loss in case the terms of a contract are not filled; a surety company assumes liability for nonperformance.
Classification
Nouns denoting possession and transfer of possession.
Examples
- A construction company was required to obtain a performance bond before starting work on the government project to ensure the project would be completed on time and within budget.
- The contractor's failure to complete the project as specified in the contract triggered a claim on the performance bond, resulting in the surety company paying the client for the losses incurred.
- To secure the contract, the IT consulting firm had to procure a performance bond to guarantee that they would meet the client's requirements and fulfill their obligations under the agreement.
- A performance bond was issued to the project developer to protect against potential losses if the contractor defaulted on the construction of the building.
- As a precautionary measure, the investors requested a performance bond from the event management company to cover the potential costs and expenses associated with non-performance or event cancellation.