performance bond

Definition

A bond issued by an insurance company to guarantee satisfactory completion of a project by a contractor.

Use performance bond in a sentence

The performance bond was issued by the insurance company and hopefully everything went well with it and it did its job.

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As the deadline approached, the management team knew that performance bond was not in vain, because they were ahead of schedule on the project.

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Performance bonds are commonly used in the construction and development of real property, where an owner or an investor may require the developer to assure that contractors or project managers procure such bonds in order to guarantee that the value of the work will not be lost in the case of an unfortunate event.

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