What is the difference between bid guarantee, bid bond, performance guarantee and performance bond?
Bid security can either be in the form of a bid guarantee or bid bond. While the bid guarantee is usually issued by an authorised commercial bank, the bid bond is normally issued by an insurance company. Bid bonds are generally given and are popular in USA. Bid security (guarantee or bond), is provided by the bidder at the time of submission of his bid, to the Client, as financial security for acceptance of a contract. The Bank does not encourage borrowers to accept bid bonds from insurance companies, as bid security. Similarly, performance security can be either a bank guarantee or performance bond. While the performance guarantee is given by a commercial bank, the performance bond is issued by an insurance company (mainly in the USA). The difference between the two is that in case of the bond the insurance company can cover the total amount of contract at little cost and has the obligation to pay for completion of the contract by another contractor. Appropriate wording for the guaran