Surety Bond Overview
A surety bond is a written agreement where one party, the surety, obligates itself to a second party, the Obligee, to answer for the default of a third party, the principal. There are two categories of surety bonds:
Contract Surety Bonds provide financial security and construction assurance on building and construction projects by assuring the project owner (Obligee) that the contractor (principal) will perform the work and pay certain subcontractors, laborers, and material suppliers.
Commercial Surety Bonds guarantee performance by the principal of the obligation or undertaking described in the bond.