Bid Bond

A bond that may be issued by a surety on behalf of a contractor to provide assurance to the recipient of the contractor's bid that, if the bid is accepted, the contractor will carry out the contract and provide a performance bond.

Under the bond, the surety is required to pay the recipient of the bid the difference between the contractor's bid and the bid of the next lowest responsible bidder if the bid is accepted and the contractor fails to provide a performance bond or to execute a contract.