Bonds and Surety

This is a business bond required of a contractor submitting a bid on a project. If the contractor then refuses to undertake the project, the bid bond assures that the developer will be paid the difference between the lowest bid and next lowest bid, subject to maximum penalty amount. The bid bond encourages contractors to make serious bids and live up to their obligations.

This bond offers protection for a mortgagee guaranteeing that the mortgagor will complete construction. The mortgagee (such as a bank) lends money to the mortgagor (the owner of the project) in order to pay the contractor who is actually physically building the project. Upon completion, the project then serves to secure the loan. Should the project not be completed, the mortgagee is protected through the completion bond.

The Employee Retirement Income Security Act of 1974 requires employers that have a pension or profit-sharing plan to maintain a bond equal to 10 percent of the amount of the plan's asset, subject to a maximum of $500,000 per plan. This bond insures that the trustees of the plan will not remove funds inappropriately.

This provides coverage to an insured business or individual for money or other property lost because of dishonest acts of its bonded employees, either named or by positions. The dishonest acts include larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction and willful misapplication, whether employees act alone or as a team.

This bond provides protection to the beneficiary against breach of contract by the surety or by the principal by obligating the surety to pay a certain amount of money if the principal fails to perform its obligation. The surety will retain the right to diminish the loss or arrange for completion of the contract.

This bond guarantees that the guardian appointed by the court is authorized to pay expenses of the minor—or of another individual who is deemed to be incapable of managing their own affairs—and will fulfill their duties.

This bond guarantees compliance with various city, county and state laws that govern the issuance of a particular license to conduct business.

This bond guarantees against defects for a specified time period following the completion of a contract.

This bond is designed to protect the state from errors or misrepresentations made while a notary is performing their duties. It ensures that the state can be reimbursed for any loss it incurs in the event that a notary betrays the public trust. This is essentially the state's insurance policy.

This type of bond guarantees a contractor will pay fees owed for labor and materials necessary for construction of a project. If these fees aren't paid, an owner who has paid the contractor might be confronted with liens from subcontractors, suppliers and workers filed against the completed project. In turn, the owner may be responsible for payment that exceeds the value of the work done.

This guarantees a contractor will perform under the contract in accordance with all specifications for the project.

This guarantees that a person licensed by a city, county or state agency will perform activities for which the business bond was granted, according to the regulations governing the license.

This bond guarantees the honesty of those holding named positions in a firm, as opposed to a business bond that refers to named individuals or is blanketed for all positions.

This is a type of surety bond that guarantees the performance of public officials. Public officials are responsible for a broad range of property including fees they collect, money they handle and bank accounts they oversee. They may also be responsible for misdeeds that result in a loss of public funds by those they supervise. In some cases, coverage is available for an entire group of employees under a Public Employees Blanket Bond.

This is a drastic but legal preliminary remedy for certain types of infringement. A federal court may order a United States Marshal to confiscate and impound allegedly infringing articles pending trial. If the allegation was incorrect, the party seeking seizure must post a bond to protect the party whose items were seized. The remedy may even be granted ex parte in certain circumstances, meaning the defendant has no chance to oppose the seizure in advance.

This guarantees that one party will make good the default or debt of another. There are three parties involved—the principal, who has primary responsibility to perform the obligation (after which the bond becomes void); the surety, who is the individual with the secondary responsibility of performing the obligation if the principal fails to perform; and the Obligee, to whom the right of performance (obligation) is owed. The surety has recourse against the principal for reimbursement of expenses incurred by the surety in the performances of the obligation). This is typically not a transfer of risk.