A bid bond is a bond where the contractor i.e. the principal guarantees the obligee i.e. the owner or municipality that the principal will honor the terms of the bid, if the contractor is awarded the contract. Bid bonds help the Obligee weed out unqualified bids or contractors. If the contractor breaches the bid the Obligee maybe entitled to compensation by claiming down upon the bid bond.The bid bond amount is usually 10% of the finale contract price. A performance and payment bond is usually required within 10 days after the bid has been awarded.