PERFORMANCE BOND/SECURITY DEPOSIT Clause Samples
A Performance Bond/Security Deposit clause requires one party, typically the contractor or service provider, to provide a financial guarantee to the other party to ensure fulfillment of contractual obligations. This guarantee can take the form of a bond issued by a third-party surety or a cash deposit held in escrow. If the obligated party fails to perform as agreed, the bond or deposit can be claimed to cover losses or complete the work. The core function of this clause is to protect the beneficiary from financial loss due to non-performance or default, thereby allocating risk and incentivizing proper contract performance.
PERFORMANCE BOND/SECURITY DEPOSIT. If, for the due performance of the Contract, the Tender shall contain an undertaking by the Contractor to obtain, when required, a bond or a guarantee of a scheduled and/or nationalized bank to be bound with the Contractor to the Employer in a sum not exceeding that stated in the Appendix to the Tender and agreed to as per the Letter of Acceptance or Letter of Intent /Work Order for such bond or guarantee, the said bank and the terms of the said bond or guarantee shall be such as shall be approved by the Employer. The obtaining of such bond or guarantee or the provision of such sureties and the cost of the bond or guarantee to be so entered into shall beat the expense in all respects of the Contractor. Performance Guarantee shall be valid up-to the 28 days from completion of Defects Liability Period and shall be kept alive till the issue of certificate of Final Completion.
PERFORMANCE BOND/SECURITY DEPOSIT i. The Consultant shall provide to the Company, within fifteen (15) days after issuance of award of contract/Letter of intent (LOI), a Performance Guarantee in the form of an irrevocable, independent, unconditional, direct obligation of the bank and on first and simple demand guarantee issued by a Pakistani Scheduled Bank or branch of a foreign bank operating in Pakistan, amount equivalent to 10% (Ten percent) of the total contract value in Pak Rupees/US$ strictly in accordance with the format of Performance Bank Guarantee given in tender document to cover and secure the Consultant’s faithful performance and execution of this Contract.
ii. Performance Bond in shape of bank guarantee shall not be acceptable with the banks i) which are NOT listed at Pakistan Stock Exchange and ii) Whose market price per share is quoted below the par value at the Stock Exchange on bid opening date. However, Performance Bond in shape of Pay orders/Cash Deposit Receipts (CDR) / Demand Drafts (DD) issued by a Pakistani scheduled bank (listed or not listed at Pakistan Stock Exchange) or a branch of a foreign bank operating in Pakistan is acceptable. The Bank Guarantee must be as per format attached at Annexure-”B.
iii. The charges and expenses payable in connection with the issuance, extension, renewal and maintenance of the Performance Bond shall be solely borne and paid by the Consultant. The Performance Bond shall be valid and shall be maintained in full force for six (06) months beyond the validity of the Contract. The Company has sole and absolute right to encash the Performance Bond without any prior notice to the Consultant in the event of any breach, failure, non-compliance or delay in the performance of the Contract, partial or whole.
iv. In-case the Consultant fails to fulfil agreed Tender / Contract Terms and Conditions, the Consultant shall be liable to pay liquidated damages as per terms and mechanism agreed in the contract. Where any loss or damage suffered by OGDCL due to any act of the bidder is more than the liquidity damages, the company will be entitled/ recover the losses through encashment of Bank; Guarantee(s) /Bid Securities/▇▇▇▇▇▇▇ Money or forfeiture of security furnished by the bidder in other procurement cases.
PERFORMANCE BOND/SECURITY DEPOSIT consultant / bidder shall provide to the Company, within fifteen (15) days of the award of the Contract, OGDCL shall require the successful bidder to furnish a performance bond issued from Scheduled Bank of Pakistan or a foreign bank operating/having branch in Pakistan with "AA" rating. The performance bond percentage not exceeding ten percent (10%) of the PO/contract amount (exclusive of General Sales Tax / PST) strictly in accordance with the format given in LOI to cover and secure the Contractor’s faithful performance and execution of this Contract. The charges and expenses payable in connection with the issuance, extension, renewal and maintenance of the Performance Bond shall be borne and paid by the Contractor. The Performance Bond shall be valid and shall be maintained in full force effect until ----------------------/ extendable six (06) months beyond the validity of the Contract. The Company has sole and absolute right to encash the Performance Bond without any prior notice to the Contractor in the event of any breach, failure, non-compliance or delay in the performance of the Contract.