Two Types of Surety Bonds
In order to keep ourselves financially secure it is sometimes necessary to make contracts or agreements to ensure that when we hire someone to perform a service, it will be completed as promised. A surety bond is one way to ensure this. A surety bond is an agreement that involves three different parties. The principal party is the person performing the service or obligation that will be contracted. The obliged is the party who will be receiving this service. And lastly, the surety is the party that will ensure that the principal’s obligations are met.
One common type of surety bond is a contract bond used in the construction industry. This type of bond is a guarantee from the surety company to the project owner, in many cases the homeowner or developer, that the general contractor on the project will perform all services as defined in the contract. A type of this kind of bond might be a payment bond, which guarantees the contractor will pay for services and materials. Or another type is a performance bond, which guarantees that the contractor will perform the work the owner wants him to do.
Another common type of surety bond is a bail bond. This type of bond has been designed so that someone in the custody of the authorities who has been charged with a criminal offense can obtain release. In this type of situation, the three parties involved include the accused party or principal, the government as the obliged party, and the bail bondsmen as the surety.
Surety bonds have been created to ensure that an agreement will be met by involving a third party who has committed to guaranteeing that contract, adding another level of safety.
Ameribonds Surety & Insurance Services http://www.ameribonds.com/ is a Surety bond and Insurance Services. Jonathan Wickham is a freelance writer.