Surety Bond

A contract of Suretyship, commonly known as a Surety bond , is like a policy of insurance, in that it provides indemnity to the obligee – as a policy of insurance provides indemnity to the insured – against loss up to a specified amount resulting from the happening of a named contingency. The contingency insured against, however, is not an event, such as death, fire or accident, but the failure of the principal to perform or fulfill the prescribed obligation or undertaking.

There is a need for Suretyship whenever an office, position of trust, contract, license or other right or privilege is offered conditioned that the one to whom the grant is made will perform the obligations he has assumed.

In the case of a Public Official the law requires, in order to qualify, a bond be posted from a qualified Surety for the faithful performance of his duties.

In the case of a Fiduciary bond where one has been appointed to a position of trust to be administered under the jurisdiction of a court, such as executor, administrator, guardian, trustee or receiver, the law requires that a bond be posted for the faithful performance of his duties.

In the case of a Judicial Proceeding where a litigant is allowed to have a particular remedy in advance of a final decision by the court, a bond must be posted to protect the opposing litigant from loss in case the final decision is adverse to the other litigant.

In the case of a License and Permit bond where one is granted a license to engage in a particular business, that privilege is granted conditioned upon him filing a bond guaranteeing compliance with the statutes governing the license.