Performance Bond
This document is provided to one party involved in a contract as a form of assurance or collateral to protect against the potential failure of the other party to fulfill the obligations outlined in the agreement. Such practices are prevalent in the fields of construction and real estate development, encompassing both private and government projects. In these scenarios, an owner or investor may insist that the developer ensures that contractors or project managers obtain this guarantee, thereby safeguarding the value of the work in the event of unexpected circumstances.
Advanced Payment Bond
This product serves as a form of collateral that ensures the buyer will receive a refund of the advance payment should the seller fail to meet their delivery obligations regarding goods or services. Additionally, it is necessary when a Contractor seeks an advance payment from the Principal to assist in covering the initial expenses and mobilization efforts associated with the contract.
Bid/Tender Bond
This document is issued by the contractor to the project owner as a component of the supply bidding process, serving as a guarantee that the successful bidder will execute the contract in accordance with the terms outlined in their bid.
Retention Bond
Retention is a percentage (often 5% -10%) of the amount certified as due to the contractor on an interim certificate that is retained by the client. This ensures the contractor properly completes the works required under the contract.
Warranty Bond
This product is collateral that provides guarantees to the project owner that the contractor who did the work will come back and fix defective work or material should an issue arise during the warranty period specified in the contract.
Customs Bond
This product is a contract used for guaranteeing that a specific obligation will be fulfilled between customs and an importer for any given import transaction. Its main purpose is to guarantee the payment of import duties and taxes.
Repayment Guarantee/Credit Security Bond
The instrument referred to as a credit security bond or repayment guarantee functions as a form of collateral intended to secure the repayment of either a commercial or private loan. Typically, the issuance of a loan is contingent upon the borrower, or a third party, providing collateral. Consequently, the borrower acquires this guarantee to serve as an alternative to traditional loan collateral for the benefit of the lender. In general, the lender is entitled to make claims under this guarantee by formally notifying in writing that the borrower has failed to repay the loan or any remaining balance upon its due date.
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