payment bond

Popular Terms
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.

Use 'payment bond' in a Sentence

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 he'd contracted for foundation and exterior work, would be paid for.
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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.
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I knew the payment would be made on time because the payment bond was in order and it was binding.
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