Chapter 5 Flashcards
Surety Bonds
Surety
State of being sure, certain and secure
Suretyship
The guarantee of performance made by one
person or entity for another
Surety Bond
An undertaking by one party (the surety) to become
accountable to another party (the obligee) for the
performance of an obligation or undertaking by a third
party (the principal). It is a promise to provide credit, if
any when needed, to ensure the faithful performance of
an obligation
Obligee
the party to whom the bond is given
Principal
The person primarily liable
Penalty
the amount which the surety is prepared to pay
in the event the principal should default
Statutory Bond
One that is required by a municipal ordinance, or
federal or provincial regulation or statute
Non-Statutory Bond
Not required by law but flows from the
contract or agreement between the parties
Contract Bond
Guarantees the fulfillment of certain obligations
required under public and private contracts
Consent of Surety
A letter assuring the owner that if the principal is
the successful bidder, the surety will issue such
other bonds as are specified to ensure the
performance of the contract
Working Capital
The amount of funds available to pay continuing
business operating expenses until payment is
received for work being undertaken by the
contractor
Net Worth
The amount of money remaining after all assets
have been liquidated and all liabilities cleared
Licence
Issued by a regulatory body such as government
in order to set rules and regulations to safeguard the
public
Permit
Fulfils same general function as a licence, except that they are usually required as prerequisites to performing special functions incidental to the operation of the business.
