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Definition of the term Performance Bond

An amount of money (usually 10% of the total price of a job) that a contractor must put on deposit with a governmental agency as an insurance policy that guarantees the contractors' proper and timely completion of a project or…

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Definition of the term Penalty Clause

A provision in a contract that provides for a reduction in the amount otherwise payable under a contract to a contractor as a penalty for failure to meet deadlines or for failure of the project to meet contract specifications.

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Definition of the term Payment Schedule

A pre-agreed upon schedule of payments to a contractor usually based upon the amount of work completed. Such a schedule may include a deposit prior to the start of work. Payments are often scheduled for the beginning of the month…

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