What is a Performance Guarantee?

The following is intended for our non-USA beneficiaries only.

It’s a frequent occurrence: a contractor fails to deliver according to the terms of a given agreement. In breach of contract situations like these, the contractor may have no choice but to abandon the job, leaving the developer with an unfinished project and an incredible exposure to a variety of risks.

In such situations, the provisions afforded by a performance guarantee (sometimes referred to as a performance bond) will activate in order to protect the developer against losses. Situations vary; the protections may come in the form of additional funding to the incumbent contractor, or it may become necessary to engage a new contractor to fix or complete the work of the incumbent.

A performance guarantee protects the project developer from economic loss and is a standard risk mitigation tool for capital projects.

What is a Completion Guarantee?

A completion guarantee (sometimes referred to as a completion bond) is a form of insurance that is often used in independently financed films to guarantee that the producer will complete and deliver the film to the distributor(s) according to an agreed-upon cast, script and budget.