What is a surety bond?
A Surety Bond is an agreement that is subject to the Bond Form. The surety bond is generally required for monetary compensation for failure to perform specified acts referenced in the bond form. The term “bond form” is another way to say that type of bond that is required.
To obtain licenses or permits for many businesses, a government entity, such as a county or state, requires that a bond be obtained. Some examples include notary bonds and tour guide bonds.
A more thorough definition is: When a first party (obligee) calls upon a second party (principal) to perform duties in contract form, a surety bond is issued by a third party (surety), guaranteeing that the second party will fulfill an obligation or series of obligations to the first party. In the event that the obligations are not met, the first party will recover its losses through the bond.