A guarantee of the faithful performance of a construction contract and the payment of all material and labour bills incidental thereto. A bond covering payment of labour and materials only is a Payment Bond and a bond covering faithful performance only is known as a Performance Bond. Refer “Guarantee, Performance Bond.”
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Sometimes also called a labor and materials bond, this bond guarantees that bills owed by the contractor will be paid as they come due. The agreement may be incorporated into the performance bond.