Bid Bond Form

Bid Bond Vs. Performance Bond

Another common type of bond is a Performance Bond. Negotiated and signed once the project has been agreed upon and the parties have finalized their agreement, the Performance Bond certifies the principal's duty to complete the project described in writing and to meet all the expectations of the customer. The moment of the signing is not the only difference - a Bid Bond form is a necessity if you want to be chosen as a contractor while the existence of the Performance Bond will depend on the mutual wishes of the parties: if they believe a formal agreement is enough to cover the project, this bond will not be required. However, if you work with subcontractors, they would prefer you to have a Performance Bond in place since it decreases financial exposure for them.

How to Get a Bid Bond?

To obtain a Bid Bond, the contractor must contact the potential guarantor - an insurance company they work with or a bond agency of their choice. Talk to your business partners and associates to find out the best possible guarantor in your area to be sure your interests are put first. Note that you should get a Bid Bond whether you plan to perform a public or a private job - both government resources and the funds of a private entity will require protection.

Bid Bond requirements will differ from job to job. At a minimum, it is necessary to include the following details in your document:

1. Identification of the parties - the contractor and the surety company. You can state the legal names and addresses of the parties and confirm you are authorized to do business in your state or town.
2. Declaration of the Bid Bond and its exact amount . If you do not know the numbers you will include in the final contract at the time of signing, you can indicate the percentage. The surety company must verify its willingness to provide a financial guarantee for the bid in question.
3. Description of the project . Consider including several sentences that outline the basics of the job - the location, the approximate estimate, and the proposed work schedule.
4. Date of the signing and signatures of the parties.

How Much Does a Bid Bond Cost?

The Bid Bond cost varies from contract to contract but a standard premium paid by the contractor to the guarantor is usually between $100 and $300. Alternatively, you may agree upon a different cost - for instance, 10% of the total contract price. The eventual amount of money you will have to pay will depend on several aspects such as the terms of the agreement you enter into with a customer, the location of the parties, the credit history of the principal as well as their former agreements with the guarantor, and the total amount of the bid.

Still looking for a particular template? Take a look at the related templates below:

• Surety Bond Form;
• Payment Bond Form;
• Bail Bond Form.