What is a Performance Bond?

A performance bond is a document underwritten by an insurer which guarantees to pay up to a maximum amount set out in the bond, usually 10% of the building contract sum, in circumstances where the contractor becomes insolvent or otherwise breaches the terms of the building contract.

A performance bond is to be distinguished from an 'on demand' bond which is a bond covering a demand by the beneficiary up to a maximum amount and where the bondsman is liable to meet that demand and pay out. A performance bond is a guarantee of performance and will only pay out where performance is a proven issue.

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We specialise in construction law, construction contracts and real estate matters and have an excellent reputation across the country. We can assist wherever you are in the based and have offices in central London.