A surety issues which type of bond to guarantee contractor performance under the contract terms?

A surety issues which type of bond to guarantee contractor performance under the contract terms?

• A. Bid Bond
• B. Payment Bond
• C. Performance Bond
• D. Fidelity Bond

Answer: (C)

When a surety is used to guarantee that the contractor will meet the contract terms, the bond involved is a performance bond. It protects the project owner by ensuring the contractor completes the work as specified, adheres to the schedule, meets quality standards, and addresses any deficiencies or warranty items. If the contractor defaults or fails to perform, the owner can claim against the performance bond to cover costs to finish the work or rectify defects, with the surety often stepping in to complete the project or compensate for damages. A bid bond is tied to the bidding process and ensures the bidder will enter into the contract if awarded and provide the required performance and payment bonds. A payment bond guarantees that subcontractors and suppliers will be paid, protecting those parties rather than ensuring contract performance itself. A fidelity bond covers dishonest acts by employees, not the contractor’s performance under the contract. Therefore, the bond that guarantees contractor performance under the contract terms is the performance bond.

When a surety is used to guarantee that the contractor will meet the contract terms, the bond involved is a performance bond. It protects the project owner by ensuring the contractor completes the work as specified, adheres to the schedule, meets quality standards, and addresses any deficiencies or warranty items. If the contractor defaults or fails to perform, the owner can claim against the performance bond to cover costs to finish the work or rectify defects, with the surety often stepping in to complete the project or compensate for damages.

A bid bond is tied to the bidding process and ensures the bidder will enter into the contract if awarded and provide the required performance and payment bonds. A payment bond guarantees that subcontractors and suppliers will be paid, protecting those parties rather than ensuring contract performance itself. A fidelity bond covers dishonest acts by employees, not the contractor’s performance under the contract. Therefore, the bond that guarantees contractor performance under the contract terms is the performance bond.