Most of us have heard of surety bonds and are vaguely familiar with their purpose. Most contractors, manufacturers, and suppliers, are usually contractually obligated to maintain a surety bond to guarantee their performance. A surety bond is best defined as a contract which involves three parties: the party required to perform (‘principal’), the party for whom the work is being done (‘oblige’), and the party who insures the action of the principal (‘surety’).
Anyone who is contractually obliged to acquire a surety bond is expected to abide by the terms of the bond. By not doing so they are opening themselves to claims, which they are expected to pay in full plus legal costs. The following infographic not only helps you understand the function and the importance of a surety bond, but it also offers an easily comprehensible guide to choosing the most suitable bond for your business.
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