Performance bonds are used to ensure that the construction professional will complete all work as outlined in the contract. This helps guarantee that the person hired will complete the job to the necessary requirements and local regulations.
Developers require performance bonds from their contractors after they have won the bid for work. Most projects will require a performance bond, and all government projects will require one. Performance bonds not only help construction projects but also serve other industries like school bus contracts and janitorial services.
A claim can be made on the bond if the principal fails to perform duties or tasks that are outlined in the surety bond. The requirements of the bond vary from project to project, but the details of the requirements are found in the surety bond. The bond will be written according to the terms of the contract.