The Performance Bond is an autonomous guarantee at first demand which is issued by the guarantor upon instructions of a subject (for example, the seller or the contractor, so-called ‘applicant’) based on a contract stipulated between the guarantor and the applicant.

The applicant submits the request to issue the bond according to the conditions of the underlying contract stipulated between the seller/contractor and purchaser/owner and to secure the due performance in favour of the latter.

The calling of the performance bond is fraudulent when the beneficiary demand the payment to the guarantor without having however the right to do so and being aware of this so that the result will be that the beneficiary will obtain an unfair profit.

The Performance Bond is, in almost all the cases, an autonomous and on-demand guarantee which can be called with a simple request sent by the beneficiary to the bank-guarantor. As any other aspect which regulates the Performance Bond, also its calling must comply with specific requirements which are normally indicated in the text of the bond. If the text does not specify anything, it is advisable to follow international standard practices laid down on this.

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’).

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.