Performance Guarantees or Performance Bond

This is most probably the most common form of guarantee, which protects the Employer / Principal against the risk of the contractor failing to comply with the conditions of the contract. Traditionally, the guarantee amount is equal to 10% of the contract sum. However, recently the new format JBCC “fixed” (7.5%) guarantee or “variable” (12.5% reducing to 2%) guarantee was introduced, of which the latter version includes a retention provision.