A performance bond requires the guarantor to complete a project if the covered contractor withdraws.

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A performance bond is a type of surety bond issued by a bank or an insurance company to guarantee satisfactory completion of a project by a contractor. If the contractor fails to complete the project as per the terms of the contract, the guarantor (issuer of the bond) is responsible for compensating the project owner for any financial losses or, in some cases, for completing the project.

A Performance Bond Requires the Guarantor to Complete a Project