Teljesítménykötés

Teljesítménykötés, a Hungarian term, translates to "performance bond" in English. It is a type of surety bond that guarantees a party will fulfill its contractual obligations. Primarily used in construction and public works projects, a performance bond protects the project owner from financial loss if the contractor fails to complete the work as agreed.

The performance bond is typically issued by a surety company and involves three parties: the principal (the contractor), the obligee (the project owner), and the surety (the insurance company). If the principal defaults on their contractual duties, the obligee can make a claim against the bond. The surety then has the option to either finance the completion of the project, find another contractor to finish the work, or pay the obligee the cost of completing the project up to the bond amount.

This financial guarantee ensures that projects are completed within budget and on schedule, even in the event of contractor insolvency or failure to perform. It also provides a level of security for the project owner, reducing the risk associated with engaging contractors. The cost of a performance bond is usually a percentage of the total contract value, paid by the principal.