Performance bonds guarantee that the Bonded Principal will undertake and fulfil their contractual obligations agreed with the Beneficiary.

Performance bonds guarantee that the Bonded Principal will undertake and fulfil their contractual obligations agreed with the Beneficiary.

In the event of contractual default (usually via insolvency of the Principal), the Beneficiary will hold security in the form of the bond which will reimburse and pay out losses and damages up to the maximum bond amount.

Who are they for? Main Contractors, Sub-Contractors, Service Providers.

Main Contractors, Sub-Contractors, Manufacturers

Receiving an advance payment from your Employer may allow you to forward order materials with lengthy lead times or commence preliminary services in advance of any main works being undertaken. Advance payments can be crucial for contractor’s cash flows when there are significant costs to get a project started. In exchange for the advance payment, the Employer will likely take security for the payment via an advance payment bond which will usually equal the advance payment sum.

Shipbuilders, Shipyards

A similar product to performance and advance payment bonds, a ship building bond will guarantee the Principal’s performance under the shipbuilding contract and guarantees that they will deliver the vessel to their client (the Beneficiary) as per the terms of the contract. If there is a default on the delivery of the vessel, the bond will provide security for the Beneficiary’s additional costs involved in completing the vessel, up to the stated maximum value of the bond.

A refund bond provides security to the Beneficiary for the potential reimbursement of any advance payments made during the project, should the client default on their obligation to deliver the vessel. Multiple refund bonds can be issued throughout the delivery of the project in relation to specific advance payments made to the Principal by the Beneficiary.