A Performance Bond is a type of surety bond that guarantees a contractor will fulfill their obligations as outlined in a contract. If the contractor fails to complete the project or meet the specified standards, the bond provides financial compensation to the project owner, ensuring that they are not left at a loss. These bonds are commonly used in construction projects, where they protect the interests of the project owner. The bond is typically issued by a surety company, which assesses the contractor's ability to complete the work before providing the bond. This helps ensure that only qualified contractors are hired for the job.