Supply bonds cover performance of a contract to furnish supplies or materials. Federal law requires contractors to post a Supply surety bond for projects over $100,000. In the event of a default by the supplier, the surety indemnifies the purchaser of the supplies against the resulting loss. For example, when someone is purchasing goods from another, a supply contract bond will guarantee delivery to the purchaser at an agreed upon price. Supply bonds can be required by the law or a project owner to secure public construction projects.
