---
title: "Performance Bond Disputes"
url: "https://legal.ge/en/service/real-estate-law-en/performance-bond-disputes-en"
field: "Real Estate Law"
description: "Performance bond disputes: bank guarantee independence and the construction contract. Legal.ge."
reviewed: "2026-07-09"
updated: "2026-10-14"
publisher: "legal.ge"
---

# Performance Bond Disputes

> Source: legal.ge, https://legal.ge/en/service/real-estate-law-en/performance-bond-disputes-en

## Performance Guarantees: the Georgian Model

The state performance-bond schemes widespread in international construction practice do not exist in Georgian legislation. What exists here is the civil-law institution of the guarantee and its most common form — the bank guarantee — which secures the performance of the underlying obligation under the construction contract. In other words, a performance guarantee in Georgia is a contractual instrument, not a security layer established automatically by legislation.

Under a bank guarantee, a bank, other credit institution or insurance organization — the guarantor — at the principal’s request undertakes a written obligation to pay the beneficiary a monetary amount in accordance with the obligation assumed, on the basis of the beneficiary’s written demand. The convenience of the guarantee lies precisely in the fact that it redistributes the risk of the contractor’s performance onto a third, financially stable person.

The full text is available on legal.ge after signing in: https://legal.ge/en/service/real-estate-law-en/performance-bond-disputes-en

### Is there a state guarantee?

No — performance is secured by the civil-law guarantee, primarily the bank guarantee.

### What form is required?

Written; valid where it does not contradict the law and does not excessively burden the debtor.

### Can enforcement be suspended for defects?

No — the guarantor is independent of the underlying obligation.

### How is it connected with the construction contract?

It secures the contractor’s duty, but its enforcement does not depend on that content.