Performance bond

The performance guarantee or performance bond is a contractual assumption of a warranty obligation for the proper performance of contractual claims, such as from a sales contract or work contract. The warranty for the occurrence of a specific result or the non- occurrence of a certain damage will be covered.

The performance guarantee is not specifically regulated in the Civil Code. In § 443 BGB, there are provisions on the " quality guarantee " or " life guarantee " on the purchase contract. Under the prevailing law of obligations contractual freedom, it is the Parties, however, free to establish warranty obligations with other content and other types of contracts.

The performance guarantee can be given as additional guarantees about in the context of a particular contract. It then serves the reinforcement and extension of contractual rights and may also provide a no-fault liability. But there is also the independent guarantee, with a guarantee of circumstances is adopted, which go beyond the success contractually owed. Such independent guarantee can in particular also be acquired by a third party in a special guarantee contract ( for example, assurance of minimum durability or carrying capacity of the building materials used by the manufacturer ).

A guarantee often complements the cooperation provided for in the Act is granted.

To secure contractual claims also a guarantee can be given about a performance bond or performance guarantee. Warranty and guarantee, however, are to be distinguished in German law. The obligation under the guarantee is dependent on a principal sum to be secured, the warranty can, however, establish an independent claims.