What is a performance bond?

A performance bond is a type of contract in Washington state law that helps protect the parties involved in a contract by providing assurance that a contractor’s obligations will be fulfilled. It is a type of surety bond that guarantees that a contractor will meet the terms of their contract, such as completing the project on time and on budget. If the contractor fails to complete the project in accordance with the contract, then the performance bond will serve as insurance and the bonded party is obligated to cover the cost of any losses incurred by the obligee. The bond is typically written by the surety company that issues the bond, and is in favor of the obligee - usually the state, or a state agency. The contractor and the surety enter into an agreement that states the contractor’s obligations and the conditions under which the bond will be released. The purpose of the bond is to protect the interests of the parties in the contract - primarily the state or agency. It ensures that the contractor meets the requirements of the contract and if not, the obligee is compensated for losses incurred. The performance bond is an important part of the contract and helps ensure that the project is completed in an orderly and timely manner.

Related FAQs

What is the termination of a contract?
What is the doctrine of privity?
What is a valid offer?
What is the parol evidence rule and why is it important?
What is an assignment of contract?
What is the law of privity?
What is a condition precedent?
What is an offer and acceptance?
What is a discharge for breach of contract?
What is a contract of indemnity?

What is a performance bond?

Related FAQs

Related Blog Posts