Performance Bond

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A performance bond ensures payment of a sum as agreed between the principal and the contractor in case the contractor fails to perform as per the terms of the contract.

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It is important to note that a performance bond [like other bonds] is not an insurance policy, the insurer only comes in as guarantor and in the event that the contractor fails, the principal is paid by the insurer who then recovers the amount from the contractor under the counter guarantee arrangement.

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