Earlier in this judgment, I set out the contents of Exhibit 4 which is a performance bond or ‘a bid bond’. This court spelt out the effect of same in A.I.D.C. v. Nigeria L.M.G. Ltd. (2004) 4 NWLR (pt. 653) 494 at 503 as follows per Ayoola, JSC;- ”Performance bonds are bonds made to secure the performance of a principal contract. Such bonds may be classified according to the obligation undertaken by the obligee. In some case, it is, in reality, a conditional guarantee, while in others, it may be what is described as an ‘on demand bond’ or, as it is sometimes called a first downward bond. If the performance bond is an ‘on demand bond’ as argued by the plaintiff, the defendant’s liability would follow merely on a demand for payment made in good faith without a need to prove the validity of the claim.”
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