Utah Contractor Practice Exam

Which type of bond ensures that the contractor will pay all labor and material bills?

1. Contract bond

2. Performance bond

3. Materials bond

4. Bid bond

The correct answer is: Contract bond

The correct choice is a contract bond. A contract bond is a type of surety bond that assures that the contractor will adhere to the terms of the contract, which includes the obligation to pay all labor and material bills. This bond generally guarantees that suppliers, subcontractors, and laborers will be compensated for their services and materials as outlined in the contract. When a contractor obtains a contract bond, they provide a level of financial security to the project owner as well as to all parties involved in the project, ensuring that obligations will be fulfilled. This is particularly crucial in construction, where many parties contribute to the completion of a project. Other types of bonds serve different purposes: a performance bond guarantees the completion of the project according to the contract specifications, a materials bond specifically covers the payment for materials used in the project but does not extend to labor, and a bid bond acts as a form of security for the bid submitted in the tendering process but does not ensure payment for labor or materials once the contract is awarded.