While awarding important contracts, the employer often takes precautionary measures to protect his interest against the possible failure of the contractor to perform the work in question. Usually the contractor is asked to deposit in cash or approved securities a certain amount based on the contract value called security deposit which is liable to be forfeited at the discretion of the employer in the event of the contractor failing to complete the work in accordance with the terms of the contract. The performance bonds issued by the Insurers are accepted by the employers in lieu of the security deposit. The Insurer guarantees to pay a stated amount in case the contractor fails to complete the contract as per terms of the contract.