Common use of Performance Guarantee Clause in Contracts

Performance Guarantee. (i) The contractor shall also be responsible for performance of work carried out by him for a period of 12 (Twelve) month beyond the completion of work for which performance security has to be furnished by him @ 5%(five percent)of amount of contract. For this purpose contractor has to submit to the department a Bank Guarantee of 5% amount of the value of work done on every running and final bill payable to him. If contractor fails to submit bank guarantee of 5% amount of the xxxxx xxxx, then 5% amount of bill shall be deducted from his running and final bill payment. However, the contractor can get refund of such performance cash security amount deducted if he submits appropriate bank guarantee valid for the period as stated above or 12 (Twelve) month after actual completion. If require, the Commissioner/ Chief Municipal Officer shall ask the contractor to extend the validity period of the Bank Guarantee(s) for such period which he considers it proper and the contractor shall extend the validity period of such Bank Guarantee accordingly. If the contractor fails to extend the period accordingly, the Commissioner/ Chief Municipal Officer shall encash the B.G. before the expiry of the validity period.