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A performance bond, also known as a contract bond, is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. The term is also used to denote a collateral deposit of good faith money , intended to secure a futures contract , commonly known as margin .
§ 2.2-4337. Bond waived for Pre-Qualified Contractors for contracts over $100,000.00 up to corresponding limits. 100% Payment & Performance Bond, certified funds, or cash escrow required for Non-Transportation related contracts exceeding $500,000.00. Transportation related contracts exceeding $250,000.00. Payment Bond Required: § 2.2-4337.
A payment bond is a surety bond posted by a contractor to guarantee that its subcontractors and material suppliers on the project will be paid. [1] They are required in contracts over $35,000 with the Federal Government and must be 100% of the contract value. [2] They are often required in conjunction with performance bonds.
Construction of the Pentagon, 1942.. The Miller Act (ch. 642, Sec. 1-3, 49 stat. 793,794, codified as amended in Title 40 of the United States Code) [1] requires prime contractors on some government construction contracts to post bonds guaranteeing both the performance of their contractual duties and the payment of their subcontractors and material suppliers.
Advantages of corporate bonds. Regular cash payment. Bonds make regular cash payments, an advantage not always offered by stocks. That payment provides a high certainty of income. Less volatile price.
A retention bond is a form of performance bond or insurance against defects, taken out by the contractor at the request of the client, or by a subcontractor at the request of the contractor, seen as being fairer and more efficient than a cash retention. [19]
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