Which one of these definitions fits the term 'performance bond'?

A performance bond specifically refers to a type of surety bond that guarantees the completion of a project according to the contractual specifications. It is essentially a safety net for the project owner and ensures that if the contractor fails to fulfill their obligations or meet the agreed standards, the surety (the entity that issues the bond) will either ensure the project is completed or compensate the owner for the financial loss incurred due to the contractor's failure.

This bond is particularly crucial in construction and other project-based industries, as it helps mitigate risks associated with non-performance by contractors. It differentiates itself from other types of bonds or guarantees by focusing specifically on the successful execution and completion of a project rather than merely covering costs or indicating financial capability.

In contrast, other options represent different concepts altogether: a guarantee of payment for materials refers to payment bonds, a promissory note from a contractor pertains to financial obligations rather than performance, and a certification of financial ability relates to the contractor's capacity to fund a project rather than ensuring it meets specified requirements.