A surety bond is a contract that has three entities involved. The surety bond is sought out by an individual or company, the bond is then provided by the surety bond company. The third entity in this arrangement is the obligee. This is the entity that is requiring the principal to get the surety bond. The bond is an agreement, and if the principal doesn’t complete the work in the bond, the obligee can get damages for it from the bond itself if it is judged that they must be paid for damages.
A surety bond is not the same thing as bail bonds. Commercial bonds and contract bonds are common ways that bonds are used during business. These bonds help with the contract when a company wants to do work for a customer. Both businesses and individuals can use these bonds. Commercial bonds are for professionals and companies who seek to serve a customer. The bond ensures that the company or professional will do their job in full compliance with laws and regulations. Contract bonds are used to ensure that contractors will finish a building job and do so on time so that the customer doesn’t lose their entire investment in the project.