Canadian Accredited Insurance Broker (CAIB) Three Practice Exam

What is guaranteed by a Bid Bond?

1. The contractor will provide a refund

2. The contractor will perform work at the tendered price

3. The contractor will complete work at any cost

4. The contractor will waive all fees

The correct answer is: The contractor will perform work at the tendered price

A Bid Bond guarantees that the contractor will perform the work at the tendered price. This security is typically required when a contractor submits a bid for a project. If the contractor is selected and fails to enter into a contract or honor their bid, the Bid Bond provides financial protection to the project owner by compensating them for any cost difference incurred in selecting another contractor. The purpose of a Bid Bond is to ensure that a contractor is serious about their bid and has the financial capability to fulfill the contract requirements if awarded. This means the contractor is obligated to stand by the bid price they have tendered, assuring the project owner that they will execute the work as promised should they win the contract. The other options do not accurately represent the purpose or guarantee provided by a Bid Bond.