Bonding

Question 1

Surety Bond

Answer 1

guarantees a specific obligation will be fulfilled. 3 party contract involving a principal, obligee, and surety

Question 2

Principal or Obligor

Answer 2

Person who is supposed to do something by obligation. Must apply and pay for the bond.

Question 3

Obligee

Answer 3

Person for whom work is to be done. Protected by the bond for actual loss or damages up to the bond limit.

Question 4

Bond Penalty

Answer 4

Bond limit. Monetary amount the surety is liable for in a bond agreement. Surety is liable for payment up to the penalty amount

Question 5

Surety

Answer 5

The insurance company issuing the bond. Guarantees work will be done or the obligee will be indemnified for their loss.

Question 6

Contract Bond

Answer 6

Used in construction to guarantee the principal (contractor) will perform on the contract.

Question 7

License and Permit Bonds

Answer 7

Occupational Bonds. Guarantee the licensee (obligor) will be able to pay the government body or a third party suffering loss (obligee) for a violation of terms of a license or permit. Required by Electricians, plumbers, loan companies, etc.

Question 8

Judicial Bonds

Answer 8

Used in court proceedings. Guarantees payment of a verdict while an appeal is considered.