Preparing the published article.
Bid Bonds and Performance Guarantees Explained
Two different instruments, two different jobs.
What each one covers
| Instrument | Purpose |
|---|---|
| Bid bond | Protects the issuer if you withdraw or fail to sign |
| Performance guarantee | Secures delivery and quality during contract execution |
| Advance payment guarantee | Secures money paid before delivery |
| Warranty bond | Covers the defect liability period |
Before you arrange one
- Check the required percentage and the acceptable issuers.
- Confirm the validity period covers the full contract plus any extension.
- Allow time for bank approval before the submission deadline.
- Record the release date so the instrument is reclaimed, not left in place.
Bond requirements vary by issuer and jurisdiction. Confirm the exact wording before issuing.