Surety Bond Explained

Surety Bond Explained

Surety Bond Explained
A surety bond is a promise from one party that they will pay a certain amount if the second party, known as the principal, fails to meet a previous obligation, such as to fulfill the terms of a contract. Surety bonds serve to protect against losses if one of the parties fails to meet an obligation. The party whose actions are at the center of a surety bond is known as the principal. The party who agrees to pay a surety bond is known as the surety, while the party that accepts the surety bond is the obligee.
Unlike other contracts, a surety bond definition involves three distinct parties to a surety bond. The parties involved in surety bonds are:
    The obligee – the party who receives the obligation;
    The principal – the primary party who performs the contractual obligation; and
    The surety – the party who assures that the obligee that the principal will perform the task.
A commercial surety bond can be:
    License or permit bond 
    Court bond 
    Public official bond 
    Lost securities bonds 
    Hazardous waste removal bonds 
    Credit enhancement financial guarantee bonds 
    Appeal bonds
    Supersedeas bonds 
    Attachment bonds
    Replevin bonds 
    Injunction bonds
    Bail bonds 
    Mechanic’s lien bonds 
    Administrator bonds
    Guardian bonds 
    Trustee bonds
    Contractor’s license bonds 
    Customs bonds
    Tax bonds 
    Reclamation bonds 
    Environmental protection bonds 
    Broker’s bonds
    Insurance agency bonds 
    Mortgage agency bonds 
    Title agency bonds
    Employee Retirement Income Security Act bonds 
    Motor vehicle dealer bonds
    Money transmitter bonds 
    Health spa bonds
    Self- insured workers compensation guarantee bonds
    Wage and welfare/ fringe benefit bonds.




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