Performance Bond Construction Law | Performance Bond Construction Project

DIFFERENCE BETWEEN A BANK GUARANTEE AND PERFORMANCE BOND

Best Answer:  A bank guarantee would be in the form of an Irrevocable Letter Of Credit (ILOC). It is for a fixed dollar amount and can be drawn down by the Obligee (Entity that required it). The bank has no responsibility for any terms of the contract.

A performance bond is issued by a surety (insurance) company and guarantees a specific contract for its full amount, which can vary based on any contract changes. The surety is effectively co-signing the contract and is as liable for the performance of it as the contractor.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s