Some key benefits of Performance and Payment Bond
· Allows you to engage into contracts with confidence and works as a surety to ensure that a project is completed to your satisfaction.
· It acts as an alternative option to Bank bonds and letters of credit
· Improves the liquidity of contractors
· Ability to reply to more tenders is enhanced.
· Reduces the demand on bank borrowing
Some drawbacks of Performance and Payment Bond
· To avoid paying the compensation, the surety may try to prove that the owner did not follow the bond's technical criteria. The surety may not have the best interest of owner in mind.
· The surety may try to show that the owner may have to settle for the inexpensive remedy to the issue.
· When a merchant or contractor fails to fulfil, the owner must calculate the losses that have occurred.
· The owner may not be able to recover the gap from the surety if the owner underestimates the losses and the future cost of completing the project.
Final Thoughts
Bid Bonds, Performance and Payment Bond and Subdivision bonds are all the rage right now. But, what exactly are they? And how do they work? Our blog post will go over performance or payment bonds and how it works for your business.
If you want to know more about Bid Bonds, Performance and Payment Bond, and Subdivision bonds, please let us know in the comments below.