Which type of bond is considered a good faith guarantee that a bidder will fulfill contract obligations?

A bid bond is specifically designed to serve as a good faith guarantee from a bidder that they will honor their proposal and fulfill the contract obligations if awarded the contract. When a company submits a bid on a project, a bid bond assures the project owner that the bidder has the financial capacity and intent to complete the work as outlined. This bond provides a sense of security to the project owner, as it protects against bidders who might withdraw their bids after the contract has been awarded or who fail to complete the project.

In contrast, a performance bond guarantees that the contractor will complete the project according to the terms of the contract. A surety bond is a broader term that encompasses both bid bonds and performance bonds and acts as a guarantee that the obligations of a specific contract will be fulfilled. Meanwhile, a fidelity bond protects against employee dishonesty or theft, and is not related to contract obligations in the same way. Therefore, the bid bond is the correct choice as it directly pertains to guaranteeing the acceptance of a bid and subsequent contract fulfillment.