A performance bond is a type of surety bond used in contractual projects to make sure that the contractor adheres to all the terms and condition of the contract and deliver the work on time. It also makes sure that the contractor does not go beyond the budget and meets the deadline.
Like other surety bonds, performance bonds are an agreement between three parties. An example would be a commercial business who needs some remodeling work in his business and hires a construction contractor.
In this case, the bond would be between the contractor (principal), the homeowner (obligee), and the person who issues the bond (surety company). The business is protected by the bond and the contractor has to sign a performance bond before getting the license to start work on the house remodeling.
If the contractor does not finish the work on time, asks for extra money, or does not follow the contract, the bond can be claimed by the obligee, and the compensation to the oblige will be granted by the surety company. However, the principal will have reimburse the bond company later.
If the contractor completes the job on time and adheres to the rules of the bond, the bond becomes null and void.
There are several performance bond companies offering bonds according to each state’s rules and regulations. You can get your bond online from some surety bond companies and surety bond websites such as http://suretegrity.com within a few minutes.