Bonds

Question 1

bonds

Answer 1

• an agreement which a person undertakes to perform a certain act
• a special type of contract where one party guarantees the performance of the principle to the obligee. failure to perform results in the person to pay a sum of money

Question 2

four types of bonds

Answer 2

1. Bid bond
   - issued during bidding to provide a guarantee
   - 10% of the contract value
2. performance bonds
   - surety bond issued by the insurance company to guarantee satisfactory completion of a project
   - 50% of contract value
3. payment bond
   - a bond posted by a contractor to guarantee that its subcontractors and material suppliers on the project will be paid
4. lien bond
   - used as a security to remove liens from a property - not put into place until a lien has been placed

Question 3

lien

Answer 3

a claim or legal right against assets that are used as collateral to satisfy debts

Question 4

subrogation

Answer 4

allows the party who pays for a loss to another party to recover loss from a third party