Surety Bond

A surety bond is a three-party agreement that ensures the completion of a contract. It involves a principal (the party required to fulfill the contract), an obligee (the party receiving the obligation), and a surety (the guarantor). If the principal fails to meet the contract obligations, the surety pays the obligee up to the bond's value. This arrangement protects the obligee from loss and provides assurance of performance, commonly used in construction and other projects requiring accountability. Essentially, it's a financial safety net that promotes trust in business transactions.