What is the difference between a surety bond and a performance bond?

The difference between a surety bond and a performance bond is that surety bonds are used to ensure that contractors will fulfill their obligations, while performance bonds assure that a job is completed as specified in the contract. Surety bonds are required by law for construction projects in Texas, and are used to guarantee that a contractor will comply with state and local regulations. The bond protects the owner of the construction project from any financial losses due to the contractor’s failure to comply. The surety bond also protects the contractor from any claims or liabilities that may arise during the construction process. Performance bonds, on the other hand, are put in place to guarantee that contractors will complete the job exactly as specified in the contract. These bonds are usually written by an insurance company and are often required by the owner of the project. Performance bonds protect the contractor as well as the owner. They guarantee that the contractor will complete the job as outlined in the contract and that the owner will receive a completed project as specified. In conclusion, surety bonds are used to make sure that contractors comply with laws and regulations, whereas performance bonds are intended to guarantee that a construction project is completed as specified in the contract. Both types of bonds are typically required for construction projects in Texas.

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What is the difference between a surety bond and a performance bond?

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