Bond. Surety bond.

Question 1

Define surety

Answer 1

ensures parties fulfill obligations

Question 2

What is a statutory bond

Answer 2

a deed. Written document with the surety seal

Question 3

What is a fidelity bond

Answer 3

involves fiduciaries. Holds special trust in handling the affairs of others

Question 4

What are the 3 parties involved in a surety agreement

Answer 4

Principal- obligated to do something
Obligee- needs bond to guarantee something will be done
surety- the one who provides this guarantee

Question 5

What are the duties of a admin and executors bond?

Answer 5

guarantees faithful performance of administer of the estate as per law. 
Will collect and preserve estates assets
pay all debts
provide an accounting for the court
distribute the remaining assets

Question 6

What does a guardianship bond cover?

Answer 6

when a court appointees a trustee to protect minors or those incapable

Question 7

What is bankruptcy trustee bond guarantee?

Answer 7

the trustees faithful performance of duties as per the bankruptcy act. They will make arrangements with creditors, negotiate, liquidate/divide assets

Question 8

What are the 3 C’s of qualifying for a surety bond

Answer 8

Character
capacity
capital

Question 9

True or false

Surety bonds are underwritten

Answer 9

True. it is for commercial activities and has rigorous underwriting

Question 10

What does a bid bond guarantee:

Answer 10

The contractor is:

• bidding in good faith
• will enter into the contract with the terms they bid with
• they will provide security/bonding needed going forward

Question 11

What does a performance bond guarantee:

Answer 11

performance of contractual obligations

• completion of a job properly and on time
• no faulty work/materials
• fulfills financial obligations ie pay suppliers/labor

Question 12

If a contractor defaults, how long does the Surety have to finish the job?

Answer 12

2 years. They can use the same contractor or find a new bid- the obligee must approve

Question 13

What does the labour and materials bond guarantee:

Answer 13

payment to supplies/labor

They must be direct suppliers and the claim reported within 120 days of the last work day.

Question 14

When would you need a maintenance bond?

Answer 14

When the warranty period is less than 1 year. Guarantees contractor will meet warranty obligations

Question 15

What type of bond does a realtor or plumber need?

Answer 15

License and permit bond. It is needed for those who need a license or permit to do business . It guarantees performance of any law/regulation

Question 16

What does the customs and Excise bond ensure?

Answer 16

payment of taxes/duty imports ie fuel tax, sales tax, custom brokers license

Question 17

True or false

Should the principal default, the liability is joint and several

Answer 17

True

both or either can be sued.

Question 18

True or false

Should the principal default, the liability is joint and several

Answer 18

True

both or either can be sued.

Question 19

What are the two main classes of bonds issued by surety companies?

Answer 19

Fidelity

Surety