Utah Contractor Practice Exam

Which bond type guarantees job completion and payment of subcontractors and suppliers?

1. Payment bond

2. Bid bond

3. Performance bond

4. Contract bond

The correct answer is: Contract bond

The correct answer is contract bond. A contract bond is a type of surety bond that ensures that a contractor will complete a project in accordance with the terms of the contract. This type of bond not only guarantees the timely completion of the job but also encompasses the obligation to pay subcontractors and suppliers involved in the project. Thus, it serves as a security measure for both the project's owner and those working under the contractor. Bid bonds and payment bonds serve different purposes. A bid bond guarantees that the bidder will take on the contract if awarded, while a payment bond specifically ensures that subcontractors and suppliers will be paid for their services and materials. On the other hand, performance bonds are meant to guarantee the successful completion of the project itself but do not specifically address the payment of subcontractors and suppliers. In summary, the contract bond uniquely encompasses both the completion of the contract and the payment obligations, making it the most fitting choice for this question.