UMB Commercial Bond
If you are bidding on an overseas contract, you may be called upon to include a bid bond along with your tender documents. Typically, the amount is 5% of the contract value, although any value can be set by the buyer. The bond is called (i.e., you have to pay it) only in the event you are awarded the bid but then refuse to sign a final contract. This process is to eliminate any non-serious bids, particularly on large, complex projects.
At the time you are awarded a large, complex project overseas, you may be called upon to issue a performance bond. This is to help assure your performance under the contract. If you fail to perform, the amount of the performance bond can be claimed against you.