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Trading Terms

Bid/tender bond

When a party submits a tender for a project, they are making a promise to the other party (known as the principal) that they will sign a contract if their tender is accepted. This assurance is called a bid bond, and it is often in the form of a bank guarantee. This ensures that the principal has a guarantee in place in case the party who submitted the tender fails to follow through on their promise. Bid bonds are an important aspect of the tendering process, providing security and confidence to both parties involved.
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