What type of bond provides performance and payment guarantees under a contract?

The correct answer is the type of bond that provides performance and payment guarantees under a contract, which is commonly known as a contract bond. A contract bond ensures that the contractor will perform the work according to the contract terms and will pay all labor and material costs associated with the project. If the contractor fails to meet these obligations, the bond provides a way for the client to recover losses or ensure the completion of the work through another contractor.

In the case of surety bonds, while they can also provide performance and payment guarantees, they are typically broader and may not specifically relate to a particular contract as a contract bond does. Fidelity bonds are designed to protect against losses caused by dishonest acts of employees and do not cover performance or payments under contracts. Position schedule bonds are usually associated with positions requiring financial responsibility but do not specifically serve the purpose of guaranteeing contract performance. Thus, the contract bond is the most accurate terminology for bonds that specifically ensure performance and payment in contractual agreements.