Surety
Bond
Surety bond is a bond which is given under the mutual
agreement between the three parties. The parties involved
in the surety bond are the principal, the surety and
the owner. This bond gives compliance with respect to
the stat and federal laws. This surety bond is a specific
type of bond issued for the benefit of the three parties.
In surety bond the first party involved is the principal,
the second party is the obligee and the third party
is the surety. In this case, the first party i.e. the
principal will guarantees the obligee i.e. to the second
party. The surety is a third person to the bond and
guarantees that the principal will give a faithful performance
of the contract to the obligee. In default of this contract,
the obligee can sue the surety and principal in the
court of law. The surety has to pay the obligee the
amount of contract price or he has to complete the contract.
The purpose of this Surety bonds is to protect the
obligee against the default acts of the principal under
the obligations. This bond is issued to the obligee
by guaranteeing the faithful performance of the contractor.
This bond also ensures the obligee that the obligee
will perform the contract within the specified time
and contract price. The principal fails in his completion
as per the terms and condition of the contract or failure
of payment of taxes, and then this bond will ensures
the principal to perform his obligation. Many types
of surety bonds are available and customer can use any
type of surety bond.
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