Contract Surety Bonds

Contract Surety Bonds are bonds that the government or an owner of a construction project may require a contractor to obtain.

These bonds are based on the contract between the parties.

There are three types of contract surety bonds:

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• Bid bond – Provides protection to a project owner (obligee) in the event a successful bidder will not enter a contract and will not provide the required surety bonds or other security

• Performance bond - Provides protection to the obligee if the contractor defaults on its obligations under the bonded contract to perform the work.

• Payment bond - Guarantees that the contractor will pay subcontractor, labor and material bills associated with the construction project.