Warranty bond refers to the exporter or contractor to apply to the bank for the issuance of a letter of guarantee in favor of the importer or the project owner, to ensure that after the early recovery of the final payment, if the goods provided by the seller or the contracted work fails to meet the quality standards stipulated in the contract, the exporter or contractor will be part of the retention monies returned to the importer or the project owner. Otherwise, the guarantee bank will give compensation. According to China's Interim Measures for the Administration of Quality Guarantee Deposit for Construction Works, the management of quality guarantee deposit for construction works implements the bank guarantee system, and the contractor can replace the retention money with a bank guarantee. Therefore, in terms of construction works, the contractor applies to the bank to issue a letter of guarantee, which can replace the quality guarantee deposit.
Legal basis
"Chinese People's **** and the State Construction Law" Article 15 of the construction project contracting unit and the contracting unit shall enter into a written contract in accordance with the law, to clarify the rights and obligations of both parties. The contracting unit and the contracting unit shall fully fulfill the obligations agreed in the contract. Not in accordance with the contract to fulfill their obligations, according to the law shall bear the responsibility for breach of contract.
"Interim Measures for the Administration of Quality Assurance of Construction Projects" Article V implementation of the bank guarantee system, the contractor can be a bank guarantee instead of reserving a deposit.