Surety bonds
A surety bond, as the name suggests ensures that an agreement to deliver, perform or complete a project be implemented or enforced by the other party. Three parties are involved in the execution of a surety bond. The obligee is the person whose interest needs to be completed or performed by the obligor. An obligor or the person who undertakes to complete the contract is responsible for obtaining a surety bond. An obligor is also referred to as the principal in a surety agreement. The surety is considered a third party to the original contract and will be accountable only should the obligor or principal default or fail to perform the agreement. In lieu of ensuring that the contract is completed in any circumstance that may arise, the surety has to be paid for executing the bond.
Court Surety Bonds
Court bonds as the name implies ensures the completion or performance of functions related to the judiciary, those involving the execution of judicial decisions. For instance, a person who seeks bail will execute a surety bond to ensure that he will not evade the court’s jurisdiction, in exchange for the liberty he sought. https://www.suretybonds.com/court-bonds.html
Commercial Surety Bond
Commercial surety bonds are required by the government from business owners due to the privilege of owning and or exercising proprietary affairs. It includes customs bonds, tax bonds and warehouse bond. A tax bond is required from business owners that engage in retail sales for instance to ensure that they pay the taxes that are to be assessed. On one hand, a customs bond is required for those who wish to bring in or import goods into a certain jurisdiction. Lastly, a warehouse bond assures an owner who stores goods in a certain facility that the goods shall be in good condition or rather reimbursed should unforeseen circumstances arise.
Contract Surety Bond
A contract surety bond is usually between a project contractor of a construction project and the client. The bond is executed to guarantee that the project shall be completed. There are three kinds of contract surety bonds, a bid bond, a payment bond and a performance bond. A bid bond assures the project owner a remedy in case that the winning bidder will not make good his bid. On one hand, a payment bond ensures that the suppliers of the project shall be paid, in case the contractor defaults. Meanwhile, a performance bond is executed should the contractor renege on the specifications agreed upon in the contract
References
Travelers. What is a Surety Bond. 2016. article. 21 March 2016.
US Small Business Association. US Small Business Association. n.d. Article. 21 March 2016.
