Best Answer: A bank guarantee would be in the form of an Irrevocable Letter Of Credit (ILOC). It is for a fixed dollar amount and can be drawn down by the Obligee (Entity that required it). The bank has no responsibility for any terms of the contract.
A performance bond is issued by a surety (insurance) company and guarantees a specific contract for its full amount, which can vary based on any contract changes. The surety is effectively co-signing the contract and is as liable for the performance of it as the contractor.