Performance Bond
A guarantee from a bank or surety, typically 10% of contract value, payable to the employer if the contractor fails to perform. An on-demand bond pays on demand; a conditional bond requires proof of default first — and the difference is enormous.
On-demand bonds are the norm in the GCC and they are exactly what they sound like: the employer calls the bond, the bank pays, and the argument about whether the call was justified happens afterwards, with the money already gone. A conditional bond requires the employer to establish default first, which puts the burden and the delay on the other side.
And the failure mode nobody watches is expiry. A bond has a validity date. Projects run late, the bond lapses, and the contractor is technically in breach of a condition it satisfied for two years and then stopped satisfying by inattention. Bond and insurance expiry belong on the same alert board as permit expiry, and for the same reason: attention flows to what has not yet been obtained.
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