Surety Bonding Flashcards
who is the principal in a surety bond
contractor who buys the bond
who is the obligee in a surety bond
the party that owns the project and requires the principal to purchase bond to attain a license or perform a service
who is the surety in a surety bond
the insurance company that guarantees the work of the principal and is liable for claims against the principal up to the bond amount
what is a surety bond?
a 3 party contract, guaranteeing performance
surety bonds are signed with a seal by
the principal and surety company
is there a cancellation provision for surety bonds?
no
surety bonds must be
bound in writing
surety bonds have no….
-cancellation provision
surety bonds work on ….
an indeterminate term
surety company has the right to…
subrogate from the principal (contractor) if they default
what happens if the principal doesnt perform according to the bond specifications?
the obligee can make a claim on the bond
if the non-performance by the principal is not rectified, what happens?
the surety carrier will have to pay the obligee up to the full bond amount. Then, it is up to the surety carrier to deal with the principal on getting their money back
