Surety bond is defined as a contract that legally binds three parties: a principal who needs the bond, an oblige who requires the bond and a surety that provides the bond. The bond guarantees the principal will act in accordance with certain laws.
𝙏𝙬𝙤 𝙢𝙖𝙞𝙣 𝙘𝙖𝙩𝙚𝙜𝙤𝙧𝙞𝙚𝙨 𝙤𝙛 𝙎𝙪𝙧𝙚𝙩𝙮 𝘽𝙤𝙣𝙙:
Contract Bond – Guarantee a Specific Contract.
Commercial Bond- Guarantee per the term of the bond form.
𝐓𝐲𝐩𝐞 𝐨𝐟 𝐂𝐨𝐧𝐭𝐫𝐚𝐜𝐭 𝐁𝐨𝐧𝐝:
Bid bond- A bid bond is a legal agreement that ensures contractors fulfill their stated obligations on a project. This form of assurance provides both financial and legal recourse to the owner of the project. Bid bonds are usually submitted in conjunction with the project's contract.
Performance bond- is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. The term is also used to denote a collateral deposit of good faith money, intended to secure a futures contract, commonly known as margin.
Supply Bond- are intended to guarantee that a supplier will produce materials needed for a specific job or project. These are generally only necessary on very large projects with a great many materials potentially involved, or a high volume of just a few materials.
Maintenance (warranty) Bond- is a type of surety bond purchased by a contractor to protect the property owner or landowner from the costs to remedy a completed construction project’s defect.
Subdivision Bond - It serves as a developer's guarantee that public improvements will be completed to an acceptable quality, in accordance with all applicable regulations, and within the required timeframe.
Payment bond - is a financial guarantee issued by a surety company on behalf of a contractor, ensuring that subcontractors and suppliers will be paid for their services and materials.
Construction surety bond is a risk transfer mechanism where the surety company assures the project owner (oblige) that the contractor (principal) will perform a contract in accordance with the contract documents.
𝐓𝐲𝐩𝐞 𝐨𝐟 𝐂𝐨𝐦𝐦𝐞𝐫𝐜𝐢𝐚𝐥 𝐁𝐨𝐧𝐝:
License and Permit Bond, Auto Dealer Bond, Employee Dishonesty Bond, Appeal Bond, Trustee Bond, and Notary Bond