Who benefits primarily from a performance bond?

A performance bond primarily benefits the lessor in a leasing transaction. This bond serves as a financial guarantee that the lessee will fulfill their contractual obligations, such as making payments or maintaining the leased equipment properly. If the lessee fails to comply, the lessor can claim against the bond to recover losses incurred due to the lessee's non-performance.

The performance bond provides the lessor with a level of security and mitigates the risk associated with leasing assets. It ensures that even if the lessee defaults, there are funds available to address the situation, which helps maintain the lessor's financial stability and protects their investment.

While the lessee initiates the performance bond, it is fundamentally intended to safeguard the lessor's interests. Although other parties like the government or insurance companies might have roles or interests related to performance bonds, the principal benefit is designed for the lessor in the context of securing the lease agreement.