PERFORMANCE BOND (PB) Clause Samples
A Performance Bond (PB) clause requires a contractor or service provider to obtain a financial guarantee, typically from a bank or insurance company, ensuring the fulfillment of their contractual obligations. This bond is usually set at a percentage of the contract value and is submitted before work begins; if the contractor fails to perform, the bond can be called upon to compensate the client for losses or to fund completion of the project. The core function of this clause is to protect the client from financial loss due to non-performance or default by the contractor, thereby allocating risk and ensuring project completion.
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PERFORMANCE BOND (PB). The Seller’s bank, in accordance with the provisions set out, will post into the beneficiary’s bank account nominated by the Buyer, an irrevocable, Divisible, Revolving, Transferable, Performance Bond to cover 2% (two percent) of the face value of Buyers payment instrument.
PERFORMANCE BOND (PB). 11.1. The Seller’s Bank, in accordance with the provisions set out, will post into the beneficiary’s bank account nominated by the Buyer, an irrevocable, revolving, transferable, Performance Bond to cover two percent (2%) of each monthly quantity, revolving for the entire contract period as per Addendum №4.
11.2. The format of the Performance Bond shall be in accordance with the least UCP 500 (Uniform Customs and Practice for Documentary Credits, 1999 revision, ICC Publication No. 500 & 2000).
11.3. In the event of Non-Performance by the Seller, the Seller’s PB will be called up by the Buyer and the Seller will instruct his bank to issue a new PB within a period twenty-four (24) hours having the same tenor as the previous one. Should this be the case, all future payments due by the buyer will be suspended until such a time the new PB has been placed.