A look at three types of surety bonds
Surety bonds are third party agreements or contracts that are made between various parties. The surety bond company guarantees the owner or the obligee that the contractor or the principle would perform the contract as per the commitment and terms and conditions. The three basic types of surety bonds are:
Bid Bond: The bid bond provides financial assurance that the commitment or the bid that has been made in good faith. The bond also ensures that the principle intends to enter into the contract at the bid price. Also, the principle would ensure that it would provide the needed performance and payment bonds.
Performance Bond: The performance bond protects the obligee from any financial loss that may occur when the principle fails to perform as per the terms and conditions of the contract or commitment.
Payment Bond: The payment bond ensures that the principle would pay all workers, suppliers, and contractors.
This entry was posted
on Thursday, October 8th, 2009 at 9:21 am and is filed under Business.
You can follow any responses to this entry through the RSS 2.0 feed.
Both comments and pings are currently closed.
