Performance Bonds
After a contractor's bid has been accepted, he or she will be required to provide a performance bid to guarantee that the project will be completed according to contract. If the contractor fails to do so, the developer or project owner may make a claim to prevent financial loss.
Performance bond requirements are set in place by the Miller Act, and are often issued in conjunction with payment bonds. If a contractor is unable to complete the job, the project owners may file a claim with the bonding company, which may in turn choose to put the job out to bid or complete the work themselves. The contractor is then responsible for repayment to the bonding company.
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