Required of contractors in connection with contracts for construction or for the supply of labor or such other service. Examples of contractor's bonds are the bidder's bond and performance bond.
A contract to supply material and equipment for construction work is placed for public bidding. The participants to such bidding are required to post a bidder's bond, which guarantees that if the principal is successful in his bid, he will enter into a contract with the obligee.
When a contract is awarded to a contractor to undertake construction work for the obligee, the contractor is required to post a bond which will guarantee that the principal (the contractor) will perform the job according to the terms and condition of the contract and within the period specified.