What is a performance bond?

A performance bond is a type of contract that is used in Virginia contract law. It is a guarantee given by one party (the surety) to another party (the obligee) that the terms of an agreement between the first two parties will be fulfilled. The performance bond will cover any damages that may be caused in the event that the agreement is not fulfilled. The performance bond is a form of financial protection for the obligee that is usually requested when entering into a contract or agreement for a specific project. The surety will have to make sure that the contractor completes the project in line with the agreement and according to the standard of work agreed upon. In the event that the contractor does not fulfill their obligations, the surety will have to pay for any damages that are caused. Performance bonds are required in certain situations, such as when a contractor is working on public contracts. This type of bond serves to protect both the contractor and the obligee, as it ensures that the contractor will fulfil the obligations of the contract. It also serves as a form of insurance for the obligee, so that they will not suffer any losses due to a breach of agreement.

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