Performance Bond
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What is Performance Bond?
Performance Bond or Performance Guarantee or Surety Bond is a Bank Instrument issued by a bank on its clients’ behalf to assure their performance as per the stated contract or trade deal.
This type of bond is mostly used in construction projects. Here, the contractor provides this bond in favor of the project owner; to assure the positive completion of the work on the project. Further, this protects project owners against any claim; in case of non performance by the contractor; against the agreed contract. As a result, the main aim of this bond is to assure the project owner; that even in case of any default – such as bankruptcy or any events, the work will not be stopped.
At the same time, Performance Bond also plays a vital role in trade. This is issued by the seller; in favor of their buyer before opening the DLC MT700 from their end. In this way, the issued bond MT760 will act as a guarantee that the goods will be supplied, once the seller receives the DLC MT700 at their bank counter.
Getting such bonds from banks can be tough; as they will demand you to block 100% cash funds. We, the Performance Bond Providers in Dubai are aware of these difficulties; and so, we’re ready to provide you the required MT760 without blocking cash funds.
How do Performance Bonds work?
When entering into a contract or trade deal, the contractors or the sellers are required to provide a Performance Bond. And this assures their commitment to complete the task on time. Further, this bond also assures the project owners; that in case of any default against the contractor or seller; then the counter party can claim the bond.
Further, this bond also works in such a way to give full protection to the project owner or buyer; by stating that the work or the supply will not affect; even if the contractor or the seller declares bankruptcy or faces other fiscal issues that would preclude them from completing the work.
Since this bond gives utmost protection against contractor’s or seller’s default; having a Performance Guarantee is one of the most required documents to sign worthy contracts and trade deals.
