A bid bond is a guarantee that the bid you submit for a project is accurate and will post a performance bond. If your bid is inaccurate or you can’t fulfill the obligations of your bid, a claim can be made against your bid bond which you’re responsible to pay.
It’s important to keep in mind there are costs for the obligee to set up and execute a proper bidding process for a job.
The obligee has to employ architects and engineers to evaluate the bids from different contractors, organize pre-bid meetings to go over project specifics with contractors who have expressed interest in the project, and promote the actual bid date so there are plenty of contractors to choose from. The bid bond ensures the obligee isn’t left out to dry if you decide to abandon the project.
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