At least 3 parties are involved in a surety bond:
- The obligee – the party who is the recipient of an obligation
- The principal – the party who will be performing the contractual obligation
- The surety – who assures the obligee that the principal can perform the task
The surety makes sure that the principal is able to perform the work for the oblige.
Contract bonds are used mostly in the construction industry, and are a guarantee from a Surety to a project’s owner (Obligee) that a general contractor (Principal) will adhere to the provisions of a contract.
For more information on bonds, please contact your insurance agent today!