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Learn The Surety Bonds Essentials
By Dalvin Rumsey
Nowadays, many company owners want to make sure that the legal terms of their closed contracts and agreements are properly respected by all parties involved. The way they can do that without any risk is by using surety bonds, which is some sort of getaway from the unstable and unpredictable economic tends. Surety bonds have been used for hundreds of years now, as long-distance trade always had to be safe and efficient.
Surety bonds can take many forms in the modern times that we all live in and their roles are very different and diverse. This is the most commonly used way to secure the terms of the contracts, especially those of the major ones. The constructions industry is one of the best examples to make it clear what such a thing as a safety bond is useful for. In the constructions field, contractors must provide project owners a bond that guarantees the respecting of the terms included in the contract and on the other hand, owners are also required to provide payment bonds to ensure that the suppliers and construction teams will receive their payment in time.
The figures show that, without the use of safety bonds, the loss of money can be very serious. The result is that not only in the construction industry, surety bonds have a very important role, allowing for project owners to avoid major financial losses and risks.
Surety bonds involve three parties: the oblige, which is the secured party, the obligor, that is the principal and the surety, which stands for the party that is secondarily liable. Surety bonds basically require the surety to guarantee the performance of a certain contractor to the owner of a project. Thus, the surety bond protects the project owner instead of the contractor.
With these things made clear, let us look at the large range of surety bonds available on the market and addressing many risky situations one can find himself in. Generally speaking, there are two main categories of surety bonds: the commercial surety bonds, which guarantee performance by the principal of the obligation stipulated in the bond and the contract surety bonds, which aim at providing financial security and construction assurance on construction projects. This can be done by guaranteeing to the obligee that the principal will perform the work and pay subcontractors, workers and suppliers.
These two categories include many different sorts of safety bonds, providing safety in all the situations that can occur.
About the Author
Surety & Construction Bonds by Shamrock Bonding Services. Let us assist you with your surety program for Surety Bonds & Construction Bonds .
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