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Term | Definition |
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Bid bond |
- A bond issued by a surety on behalf of a contractor
that provides assurance to the recipient of the contractor's bid that, if
the bid is accepted, the contractor will execute a contract and provide a
performance bond. Under the bond, the surety is obligated 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 execute a contract or to provide a performance bond.
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