A bond is an instrument of guarantee whose purpose is to ensure that the obligations established in a contract are carried out. In our country, there are different types of Bond, which are classified into 5 large Branches, all can be hired by Moral or Physical People, through an intermediary.
The Administrative Bonds, are responsible for ensuring that the obligations arising from a contract, purchase order, lease or order are met. Within this Branch, we find the Advance Bond and the Compliance Bond.
What is an advance deposit used for?
Guarantee the proper use and correct application of the money that is delivered to the provider of a service is possible with a deposit in advance. Through this instrument, the beneficiary can be certain that in case of not making good use of the money delivered as “advance payment”, the total or partial refund will be made.
With an advance deposit, individuals and companies can rest assured that the money they provide to a service provider company will be used correctly to carry out the execution of the obligations previously established in the work contract.
What is the function of a Compliance Bond?
Ensuring timely compliance with the obligations established in a contract is possible with a Compliance Bond. This type of guarantee gives the beneficiary the assurance that the company that provides a service will carry out the work in accordance with the agreement. In the event that a breach of contract occurs, the beneficiary may make valid the Compliance Bond, which will serve as a type of compensation for the damages resulting from such breach.
On the other hand, the Bond of Compliance guarantees the delivery in time and form, of the goods and services contracted through any order or purchase order.
Both types of deposit are normally issued for 10% of the total value of the contract whose fulfillment is being sought. To process it, it is essential to present the necessary documentation for a bond contract.
Are you about to sign a work contract, order or purchase order with a company? It guarantees the good use of the advance and the fulfillment of the contract with a Bond!
Contact us, our professional advisors in the process of Bail Bonds will support you!