Letter of Performance Bond (PB) is an important document issued by banks to guarantee the fulfillment of a contractual obligation. This document provides assurance to the beneficiary that the principal will carry out their duties as specified in the contract. In this article, we present a sample letter of performance bond in English for reference.
Dear [Beneficiary's Name],
We, [Bank's Name], hereby issue this Performance Bond in accordance with the terms and conditions set forth in the contract entered into between [Principal's Name] and [Beneficiary's Name] on [Contract Date] for the execution of [Project/Service Name].
This Performance Bond guarantees that [Principal's Name] shall perform all obligations and responsibilities as outlined in the contract. It covers any potential breaches or failures to meet the agreed-upon terms and conditions.
The value of this Performance Bond is set at [Bond Amount]. This amount shall remain valid and enforceable from the effective date mentioned in the contract until the completion or termination of [Project/Service Name].
In the event of any breach of contract or failure to fulfill the obligations, the beneficiary shall notify [Bank's Name] in writing within [Notice Period]. Upon receipt of the notice, [Bank's Name] will conduct a thorough investigation to determine the validity of the claim.
If the claim is found to be legitimate, [Bank's Name] will make payment to the beneficiary within [Payment Period]. The maximum liability of [Bank's Name] under this Performance Bond is limited to the bond amount mentioned above.
This Performance Bond shall be automatically terminated and considered null and void upon the successful completion of all obligations by [Principal's Name]. Upon termination, [Bank's Name] shall release the remaining funds held under this bond to [Principal's Name].
The attached sample letter of performance bond serves as a guide for banks and beneficiaries in drafting their own PB documents. It is essential for both parties to clearly outline the terms and conditions to ensure a smooth execution of the contract and protect their respective interests.
