Let’s make sure you’re covered in the event your contractor fails to meet their obligations.
Performance & Completion Bonds
Common in industries like construction and real estate development. A performance bond is issued by one party to contract to the other party as a guarantee against the issuing party's failure to meet their obligations under the contract, or to deliver on the level of performance specified in the agreement.
In the case of a construction project, a performance bond may compensate the client if the contractor fails to complete the project. A payment bond insures against the risk of the contractor not paying their subcontractors, who could then sue the project's owner. There are three parties to a performance bond:
The Principal
The Principal is the primary entity or person who will be doing the work. Often this is a contractor or similar type of firm.
The Obligee
The Obligee is the company, individual or governmental entity who will be the recipient of the work. A city who will be having roadwork done by a contractor might have a performance bond to make sure the work is finished to specifications.
The Surety
The Surety is the financial institution providing the performance bond.
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