What's the Difference Between Payment and Performance Bonds?

What is the difference between a Payment Bond and a Performance Bond? A payment bond is a promise of payment and a performance bond is a promise of performance. A payment bond is a surety bond, most often on public projects, issued as assurance of payment to certain parties should the principal of the bond breach their construction contract. A performance bond is a bond issued to one party of a contract as a guarantee of the performance of the other party to meet the obligations specified in the contract.