Bid Bonds: A bid bond guarantees the owner that the principal will honor its bid and will sign all contract documents if awarded the contract.
Payment Bonds: A payment bond guarantees the owner that subcontractors and suppliers will be paid the monies that they are due from the principal. The owner is the obliger; the “beneficiaries” of the bond are the subcontractors and suppliers.
Performance: Bond guaranteeing that a contractor will perform under the contract in accordance with all the specifications of the bid submitted.