In international commercial transactions, it is very common for the importer/owner to request the supplier/contractor to issue a Performance Bond (i.e., almost always an autonomous and on-demand guarantee) to be called in the event of breach of some of the contractual obligations, as agreed in the underlying contract.

The Performance Bond is a guarantee by means of which the purchaser or the owner secure the risk of the default of the counter-party (the supplier or the contractor). In case of default, the purchaser will obtain a sort of indemnity from the subject who issued the bond (usually a bank, called also the ‘guarantor’).

One of the most frequent problems in international construction projects (and more generally in international commerce) is represented by the issue of bonds or guarantees that the Employer requests to secure the performance of the contract. The purpose of said bonds (such as the Performance Bond) is to guarantee the Employer that he will recover any loss or damage that it might suffer as a consequence of the breach of the Contractor. 

The Performance Bond is an on-demand guarantee (or rather, under Italian Law, it is an ‘autonomous’ and at first demand' guarantee) by virtue of which the beneficiary (as buyer or owner) can obtain a certain amount of money on the basis of a simple request submitted to the guarantor declaring that the other party has breached some of its contractual obligations.

No need for the beneficiary to prove the actual default.

Mora & Associati, with a team composed of Giuseppe Broccoli and Elisabetta Ventrella, won another Italian legal proceeding for the calling of a USD 6.5 Million Performance Bond issued by an Italian Bank in favor of a foreign Owner in connection with the construction of a mine plant in the Republic of Zambia.

Mora & Associati is pleased to announce that the Partner Giuseppe Broccoli has been nominated as Thought Leader by Who's Who Legal in the 2019 Construction Directory.

This is a great recognition for our Partner and for the work done by our Firm in several International Construction Projects.