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bid bond

A bid bond is provided by a contractor in a competitive bidding situation as a means of guaranteeing that, if awarded the project based on the bid submitted, the contractor will execute the contract for the quoted price.

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If the contractor declines to enter into a contract to perform the work at the agreed-upon price, the bid bond will reimburse the obligee (owner or upper-tier contractor) the difference between the defaulting contractor's bid and the next lowest bid, up to the penal sum of the bond.


proposal bond

Related Terms

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