Other Contract
Supply Bond
A supply bond is a contract bond that guarantees a supplier will deliver the materials or equipment it agreed to provide, on time and at the agreed price.
- Required by
- Public agencies and project owners buying materials or equipment
- Bond amount
- Set by whoever requires the bond. We confirm it.
What this bond guarantees
The bond promises the buyer or project owner (the obligee) that the supplier will deliver as the supply contract says. If the supplier fails to deliver, the obligee can claim against the bond for its added cost to get the goods elsewhere. The surety pays valid claims and then recovers from the supplier.
Who needs it
- Material and equipment suppliers on public contracts
- Manufacturers supplying government agencies
- Vendors on large private supply contracts
What the underwriter looks at
- Supplier financial statements
- Contract size and delivery schedule
- Track record with similar contracts
- Credit
Requirements vary by state and by who asks for the bond. Send us the request you received and we will confirm exactly what it calls for.
Common questions
How is a supply bond different from a performance bond?
A performance bond covers building or completing work. A supply bond covers only delivering goods, so the risk is usually lower.
How big is the bond?
It is usually tied to the value of the supply contract. The buyer's bid documents set the percentage.