CH 22 QUIZ
Litigation Bonds may also be referred to as:
Court Bonds
Which of the following is FALSE?
Surety bonds and Insurance policies are both three party contracts
Which of the following can change the amount of the surety agent's bonding authority?
The surety company through the agent's power account/power of attorney/letter of attorney.
Unlike property insurance policies, surety bonds:
are 3-party contracts.
Which bond guarantees that the bidder will sign the contract and provide a performance bond?
bid bond
Under default of an injunction bond, damages may be paid to the:
defendant if the injunction was wrongfully issued.
The parties to a bond include each of the following EXCEPT:
donee
Fidelity Bonds cover acts of:
employees
The insured (obligee) under a Fidelity Bond is the?
employer
The purpose of suretyship is:
guarantee
Another name for the surety is the:
guarantor
The bond required of a person appointed by a court to handle the affairs of an incompetent person is the:
guardian's bond
Bonds:
may be written for any length of time agreed upon by the parties
A fidelity bond will cover employee theft of:
money or inventory stolen before employer discovers that the employee has been stealing
Bail bond agents have a limit placed on the amount of money they may post as bail. This amount is determined by the:
power of attorney given to the agent by the surety company
In a bid bond, the contractor is the:
principal
The Principal's nonrefundable premium paid for a surety bond is also known as the:
service fee
A bail bond will be "forfeited" if the principal:
skips town and doesn't appear on the trial date
A Performance Bond is an example of a ________ bond.
surety
The indemnity agreement is designed to protect the:
surety
The party who agrees to pay the insured (obligee) for loss caused by employee embezzlement under a Fidelity bond is the:
surety
Under a bond, the party who pays the insured for default is the:
surety
The indemnity agreement allows:
the Surety to sue the Principal
The bond's penal sum is paid by:
the Surety to the Obligee if the Principal defaults
Surety bond underwriters consider which of the following to be the most important issue when determining whether to issue a bond?
the applicant's moral character
An employer has just discovered that an employee has stolen $15,000. The employee's fidelity bond covers only $10,000 of the loss. Who has first claim against the employee?
the employer for the $5,000
The surety will pay the bail bond's penal sum to the obligee if the principal:
fails to show up for trial
Which bond covers employee embezzlement?
fidelity
Blanket Position is a type of:
fidelity bond
The surety agent's authority is controlled by the:
Power of attorney, power account, letter of authority from the Surety Company.
A bond that guarantees bills for labor and materials will be paid by the contractor is a:
Labor and Materials Bond
Larry decides to open up a liquor store. He learns that state law requires him to post a bond guarantying that he will comply with state liquor laws before he can start selling liquor. What type of bond is this?
License and Permit
Which is true regarding a bond if there is a default on the underlying contract and the surety is obligated to pay the penal sum?
The principal is liable to the surety.
Who can issue a bail bond?
a licensed surety agent
Which of the following may post a bail bond?
a licensed surety company
A government official handling money may be required to have a public official bond guaranteeing that the public official won't steal money. Which of the following city officials would most likely have to post a public official bond?
city treasurer
Which bond assures that work done by the principal will be free of encumbrances and liens?
completion bond
The purpose of suretyship is:
indemnity
If a principal defaults and the surety pays the obligee, the principal is liable to the surety under the:
indemnity agreement
The surety may also be referred to as an "indemnitor." If the principal defaults, the indemnitor is obligated to pay the penal sum to the:
obligee
Which of the following may post a bail bond?
only a licensed surety company
To guarantee to the lender that a building contractor will complete the construction, the contractor should purchase which Surety Bond?
performance
To guarantee to the owner that a building contractor will complete the job, the contractor should purchase which Surety Bond?
performance
The Postal Service wants to guarantee that a contractor will be able to complete an addition to the post office according to the contract specifications. The contractor should purchase a:
performance bond
Another name for the bond's premium is:
the service fee.
An obligee fails to make scheduled payments owing to a contractor (principal). As a result, the contractor refuses to continue with the construction. In this situation:
the surety and the principal are both released of their obligations under the bond