Performance bond: Difference between revisions
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A bond is an instrument issued by a bank or an insurance company, in favour of a buyer, on behalf of a supplier, as additional assurance to the buyer that the supplier will perform its obligations under the supply contract. | A bond is an instrument issued by a bank or an insurance company, in favour of a buyer, on behalf of a supplier, as additional assurance to the buyer that the supplier will perform its obligations under the supply contract. | ||
Revision as of 19:02, 22 June 2017
Trade finance
A bond is an instrument issued by a bank or an insurance company, in favour of a buyer, on behalf of a supplier, as additional assurance to the buyer that the supplier will perform its obligations under the supply contract.
Such a bank bond or insurance company bond will be supported by an indemnity issued by the supplier in favour of the bank or insurance company.
A performance bond can be called by the buyer in the event of any contract delays or defects in the supplier's performance of the contract.
