What is executed in connection with a contract and secures the performance and fulfillment of all the undertakings, covenants, terms, conditions and agreements contained in the contract?

What is executed in connection with a contract and secures the performance and fulfillment of all the undertakings, covenants, terms, conditions and agreements contained in the contract?
A . Liability insurance
B . Performance bond
C . Bid bond
D . Surety bond

View Answer

Answer: B

Explanation:

A Performance Bond is a type of surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. In connection with a contract, a performance bond secures the performance and fulfillment of all the undertakings, covenants, terms, conditions, and agreements contained in the contract. This ensures that if the contractor fails to complete the project as per the contract, the owner is compensated by the bond issuer for the financial losses incurred. This bond is crucial in construction and large projects to protect the client against the risk of contractor default.