As we have already mentioned, bonds are guarantee instruments whose purpose is to ensure the fulfillment of an obligation. They can be hired by physical or moral persons, through an intermediary.
There are different types of bonds, in Mexico they are divided into 5 large branches. Within Branch III, are the Administrative, whose function is to ensure that the obligations arising from a contract, purchase order, order or lease are met. Within this Branch, the Advance Bond and the Compliance Bond are included.
Why is it important to hire a Compliance Bond?
Having a contract in place, it is important that there is a guarantee that guarantees compliance with the obligations established therein. In this way, you can be sure that the company that provides a service will carry out the work according to the agreement. If this does not happen, the contracting party may validate the Compliance Bond, which will function as a kind of compensation for the damages resulting from the breach.
In addition, with a Compliance Bond, the delivery in time and form of goods and services contracted through a contract or order can be guaranteed, ensuring that these will be delivered with the characteristics and amounts previously established.
Why is the advance deposit important?
Hiring an advance deposit, helps ensure the proper use and correct application of the money given in advance to the person who provides a service, providing the certainty that in case of not making good use of it, it will be returned 100% the amount provided in the advance, in case the works have been partially completed, the corresponding amount will be returned.
This type of bond is normally issued for 10% of the total value of the contract whose fulfillment is sought to guarantee. Once the interested party presents the necessary documentation for a bond contract, the process is very simple and fast.
Advance and Compliance Deposit
Are you signing a construction contract, purchase order or order with a company? It guarantees the good use of the advance and the fulfillment of the contract with a Bond!