6) Surety bonds Flashcards
1
Q
What are Surety bonds ?
A
It is a 3 party agreement that legally binds together a principal who needs the bond, an obligee who requires the bond and a surety company that sells the bond
(Simple – Nikhil needs money , Sagar has money. Rakesh stands as surety that if Nikhil fails to repay within a prescribed time , he will pay)
2
Q
Where is this going to be extended now ?
A
To transport sector and infrastructure development.
For ex Surety of developing a road or highway after taking finance. If failed, a 3rd party who has given surety will have to take charge
3
Q
Why Surety bonds in Road sector ?
A
Guarantees satisfactory completion of a project by a contractor and also provides performance security
