Surety Bond
/ˈʃʊrɪti bɒnd/
Definitions
- (n.) A contract by which a surety guarantees the performance or obligations of a principal to an obligee, ensuring compensation for loss if the principal defaults.
The contractor obtained a surety bond to guarantee completion of the project.
Forms
- surety bonds
Related terms
See also
Commentary
Often used in construction and commercial transactions, surety bonds involve three parties and differ from insurance by focusing on guaranteeing performance rather than risk pooling.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.