A Retention Bond is a type of performance bonds that protects the risk of the contractor’s failure to perform the contract after the contractor finished the work or project. The Retention Bond is an agreement between a contractor and client by a third party known as a bond provider which acts as a guarantor. The Retention Bond states that the bond provider will undertake to pay the client up to the amount in return for the client when the contract fail to carry out the work or remedy defect. Retention monies are normally viewed as a security for the cost of rectifying defective works.
Related Definitions in the Project: The Bond and Insurance; Project Management; Project Contract
