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This Practice Note, Performance Bonds in international supply contracts, sets out an introduction to some common types of performance bonds used in international supply contracts such as pre-qualification bonds, tender (or bid bonds), advance payment bonds (APB), maintenance bonds, completion bonds, retention bonds, customs bonds and facility bonds. Performance bonds are used on many projects in order to provide security to the customer against the supplier's non-performance. The Practice Note also considers how trade sanctions and embargoes may affect the performance of contractual obligations in international contracts for which a Bond may be required.

This Practice Note does not consider letters of credit which are most commonly used in international supply contracts to provide a secure method of payment under the sales contract between the buyer and seller, as protection for the supplier against the creditworthiness of the buyer. For guidance on letters of credit, see: Letters of credit—overview and Practice Note: Characteristics of commercial letters of credit.

This Practice Note also does not consider parent company guarantees—where the parent company to the supplier guarantees