A performance bond (also called performance guarantee) is a bond issued by a bank whereby the bank assumes the obligations to a buyer or other beneficiary analogous to those assumed by a confirming bank to the seller under a documentary credit.

A performance bond (also called a performance guarantee) is a bond issued by a bank whereby the bank assumes the obligations to a buyer or other beneficiary analogous to those assumed by a confirming bank to the seller under a documentary credit.

1 The Contractor shall immediately on execution of this Contract procure and deliver to the Employer a performance

Construction analysis: The court made declarations concerning the liability of the defendant surety to the claimant employer under the terms of a performance bond based on the ABI Model Form. The court held that the contractor’s insolvency was enough to trigger the bond (due to a bespoke amendment), and that in any event the contractor had been in breach of the construction contract (which incorporated the JCT conditions) by failing to pay the amount due to the employer following insolvency as ascertained under the contract.

This Practice Note introduces common types of performance bonds used in international supply contracts such as pre-qualification bonds, tender (or bid bonds), advance payment bonds (APB), maintenance bonds, completion bonds, retention bonds and facility bonds. Performance bonds are used on many projects in order to provide security to the customer against the supplier's non-performance. This Practice Note also considers how trade sanctions, export controls and embargoes may affect the performance of contractual obligations in international contracts for which a bond may be required. This Practice Note does not consider letters of credit which are most commonly used in international supply contracts to provide a secure method of payment under the sales contract between the buyer and seller as protection for the supplier against the creditworthiness of the buyer. For guidance on letters of credit, see: Letters of credit—overview and Practice Note: Characteristics of commercial letters of credit. This Practice Note also does not consider parent company guarantees—where the parent company to the supplier guarantees the performance of its subsidiary supplier’s obligations to the customer under

This Practice Note examines the nature of performance bonds, why they are required and where they fit into the suite of documentation commonly required for any construction project. The Practice Note also addresses practical issues relevant to the negotiation and drafting of bonds. For guidance on making a call under a bond, see Checklists: Calling on a conditional bond—checklist and Calling on an on demand bond—checklist. The basic structure of a performance bond arrangement A performance bond is a contract whereby: • in relation to a building contract entered into by a building contractor and its appointing employer, ie the beneficiary • a third party ('the surety’) accepts liability for the performance of the contractor under the building contract (to the extent of the obligations described in the performance bond) If the surety is required to make a payment to the employer under the performance bond, the surety is likely to have common law rights to reimbursement from the contractor, but this is usually confirmed by way of a written indemnity agreement, entered into by the contractor in favour

A mechanism that determines the eventual equity allocation between groups of shareholders. The equity allocation in a company varies, depending on the performance of the company and the rate of return that the private equity firm achieves. Performance ratchets are often used as a incentivisation tool for the managers in a buyout.

Performance rights protect a performer's live or recorded dramatic and musical performances from having unauthorised recordings or broadcasts made of them. Performance rights are particularly useful to protect the rights of performers in relation to ‘bootlegs’ (unlawful recordings of a live performance made without consent).

A form of security or performance bond required from the contractor under FIDIC forms of contract to ensure proper performance.

This Practice Note examines the different types of performance security documents which are used on construction projects in the UK. It provides brief commentary on parent company guarantees, bonds (including performance bonds, advance payment bonds and retention bonds), collateral warranties, third-party rights, direct agreements and letters of reliance. It also considers provisions within construction contracts that provide performance security, such as payment security methods and performance guarantees. Parent company guarantees Parent company guarantees (PCGs) are often provided to an employer by a main contractor’s holding or parent company. In essence, if the main contractor defaults in its obligations under the construction contract, then the employer can seek recourse against the holding/parent company either financially or potentially in terms of performance if the parent company has sufficient resources to step in and continue the carrying out of the project in the main contractor’s stead. Theoretically, this recourse could also be used in the event that the main contractor is insolvent, although employers should bear in mind that the insolvency of a main contractor will affect the contractor group

Background The EU enforced a directive with a renewable energy supply target of 20% by 2020 and the UK imposed its own target of 20% renewable output by 2020. This and subsequent climate change targets set by the UK and other governments (for more detail, see Practice Note: Climate change—emissions targets, carbon budgets and net zero) has led to a growing global need for investment in the renewable energy sector. The government is unlikely to invest further large amounts or increase tariffs during the current funding cuts. There has also been a drastic decrease in the availability of affordable debt from banks. Therefore, new ways must be found to maintain and increase investment into the renewable energy market alongside bank debt. See Practice Note: Introduction to UK energy projects for construction lawyers Banks have been forced to look again at their renewable energy portfolio and in some instances have looked to refinance in order to maintain lending. The prominence in renewable or 'eco-bonds' and other alternative funding vehicles is therefore on the increase but all of

An investment management fee the extent of which is determined by the degree of over or under performance relative to an agreed benchmark.