Obj8 Types of Surity Bonds Types of Surety Bonds

Court bonds

A classification of surety bonds guaranteeing that a person or an organziation will faithfully perform certain duties prescribed by law or by a court or will demonstrate financial responsibility for the benefit of another until the final outcome of a court's decision

Public Official Bond

A commercial surety bond guaranteeing that a public official will perform his or her duties faithfully and honestly

Bid Bond

A contract bond guaranteeing that a contractor bidding on a construction or supply contract will enter into the contract and will provide a performance bond if the bid is accepted

Maintenance Bond

A contract bond guaranteeing that the work will be free from defects in materials and workmanship for a specified period after the project is completed.

A payment bond is a contract bond guaranteeing which one of the following?

A payment bond is a contract bond guaranteeing the project will be free of liens.

Conctract Bond

A surety bond guaranteeing the fulfillment of obligations under construction contracts or the other types of contracts

Payment Bond Defined

A type of Surety bond which guarantees that the project will be free of liens

Performance Bond

A type of surety obtained by the contractor. It is for the protection of the owner and is used to help ensure that the work will be complete in accordance with the contract documents (AIA A312)

The obligee is usally the owner of a proposed construction project under this type of bond, altthough in some cases it may be a general contractor

Bid Bond as the anwser

Contract bonds fall into several categories

Bid Bond; Performance Bond; Payment Bond; Maintenance Bond;

This type of bond is oftern required in connection with lawsuits, disputes over the ownership of personal property.

Court Bonds as the anwser

Contracts are often required by laws, therefore, obligees are often whom?

Government entities, however, private entities can be obligees in such contracts

These types of bonds often support private and unique busines needs,

Lost securities bonds, Hazardous waste removal bonds, Credit enhancement financial guranty bonds

Some perofrmance bonds automatically include this coverage without an additional charge for one year

Maintenance Bond as the anwser

This type of bond provides vital portection to private project owners because of labor and material suppliers who get uncompensated can usually apply a mechanic's lien to the property

Payment Bond as the anwser

This type of bond gives the surety several options if the principal defaulted, such as completing the work using existing contractor or replacement, having the obligee arrange for completion of work and reimbursing the obligee for cost. Also, the surety has the right to seek reimbursement from the principal for any payment

Performance bond as the anwser

Describe the two broad purposes of contract bonds?

The Surety's willingness to furnish the bond is evidence that, in the surety's judegment, the principal is qualified to fufill the terms of the contract, and the------- surety guarantees that, even if the principal defaults, the obligations of the contract will be performed, or the surety will indemnify the obligee

Suretyship

The obligation of one entity to answer for the debt, default, or miscarriage of performance duties by another enitity

Surety

The party to a surety bond that guarantees to the obligee that the princpal will fulfill an obligatin or perform as required by the underlying contract, permit, or law

Principal

The party to a surety bond whose obligation or performance the surety guarantees

Obligee

The party to whom the prinicipal makes the promise, and for whose protection the bond is being written

Describe the types of public officials who are commonly required by law to have public bonds?

Those who duties involve the handling of public funds, the seizure and disposition of property, the arrest or detention of persons, or any other duties that could result in violation of the rights of others

Lost securities bonds

entity that issues replacements for lost securities will be indemnified for any financial loss that results from the duplication of the securities

Credit enhancement financial guaranty bonds

guarantee governmental entities that investors will be paid promised interest and the principal will be returned at maturity of debt instruments

Hazardous waste removal bond

guarantees federal and state goverments that owners or operators of hazards waste facilities will comply with laws for closure and post closure care of the facilities

Miscellaneous Bonds

those that do not fit under other surety bond catergories