bid bond
A bid bond is provided by a contractor in a competitive bidding situation as a means of guaranteeing that, if awarded the project based on the bid submitted, the contractor will execute the contract for the quoted price.
Additional Information
If the contractor declines to enter into a contract to perform the work at the agreed-upon price, the bid bond will reimburse the obligee (owner or upper-tier contractor) the difference between the defaulting contractor's bid and the next lowest bid, up to the penal sum of the bond.
Synonyms
proposal bond
