Definition of Payment bond:
Deposit or guaranty (usually 20 percent of the bid amount) submitted by a successful bidder as a surety that (upon contract completion) all sums owed by it to its employees, suppliers, subcontractors, and others creditors, will be paid on time and in full. Also called contract payment bond.
How to use Payment bond in a sentence?
- You may want to take a payment bond from someone before you start working on their order if its the first time you did business.
- The owner of the contracting firm elected to make use of a payment bond to ensure that all the lumber, shingles and other requisite supplies, as well as those hed contracted for foundation and exterior work, would be paid for.
- I knew the payment would be made on time because the payment bond was in order and it was binding.
Meaning of Payment bond & Payment bond Definition