Performance guarantee means the contractor will ensure the fulfilment of contractual obligations. In other words, the contractor is responsible for complying with the terms and conditions mentioned in the contract.
The contractor may be required to arrange a performance guarantee from the employer, insurance company, or bank.
It’s a sign for the contract employer that their work will be executed in line with the contractual terms given in the contract.
Non-compliance with performance guarantees can trigger certain financial repercussions/penalties. So, the contractual clause related to the guarantee needs to be professionally drafted and agreed upon by both parties in the contract.
Wrap up
Performance guarantee means the contractor guarantees to ensure compliance with provisions given in the contract.
The contractor may be required to furnish contractual guarantees via banks, insurance companies, or employers.
Non-compliance can lead to financial repercussions/penalties. Hence, it should be drafted professionally.
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