Chapter 2
Types of Surety Bonds
Bid, performance, advance payment, warranty, payment, customs, judicial and commercial surety bonds explained.
Topics in this chapter
2.01
What Is a Bid Bond?A bid bond, often called bid security, assures the procuring entity that a bidder will honour its bid and execute the contract with the required bonds if awarded. It is normally required at bid submission.
2.02
What Is a Performance Bond?A performance bond guarantees the project owner that the contractor will perform the contract according to its terms. It is normally required after award, before contract signing or notice to proceed.
2.03
What Is an Advance Payment Bond?An advance payment bond, also called a mobilisation or downpayment bond, secures the repayment or proper liquidation of an advance the owner releases before work is performed.
2.04
What Is a Warranty Bond?A warranty bond, sometimes called a maintenance or defects liability bond, guarantees the correction of defects that appear after completion, during the warranty period stated in the contract.
2.05
What Is a Customs Bond?A customs bond secures obligations owed to the Bureau of Customs, such as duties, taxes and conditions attached to particular import arrangements, where the obligation is not settled in cash at the outset.
2.06
What Is a Judicial Bond?A judicial bond is posted in connection with a court proceeding — for example to obtain or dissolve a provisional remedy, or to secure a party against damage arising from a court order. Its terms follow the court's requirement.
2.07
What Is a Payment Bond?A payment bond guarantees that the contractor will pay its subcontractors, suppliers and labour on the bonded project. It protects the owner and those downstream parties from unpaid claims arising out of the work.
2.08
What Are Commercial and Contractual Surety Bonds?Contract bonds support construction and supply contracts — bid, performance, advance payment, warranty and payment bonds. Commercial bonds support other obligations, including regulatory, customs, judicial and fiduciary undertakings.
Important Notice
SuretyPH is a digital platform for surety bond information, inquiries, and application facilitation. Submission of an inquiry or supporting documents does not constitute approval, binding, or issuance of a surety bond. Any formal application is subject to the requirements, evaluation, underwriting, terms, conditions, and approval of the applicable duly licensed insurance company.
SuretyPH is a digital platform for surety bond information, inquiries, requirements and request tracking. It does not underwrite, approve, bind, issue, or guarantee any insurance policy or surety bond. Evaluation, underwriting, approval, pricing and issuance are undertaken by the applicable licensed insurance company.