A surety bond can be defined as contract between three parties guaranteeing that a job will be completed in accordance to the contract terms. The three are the project owner who is the obligee, contractor who is the principal and the surety who ensures the task at hand is completed as per the agreement terms. Surety bonds are more financial related and already though they are very shared in the construction industry, they come in different types touching on different areas of agreement. Below are some of the most shared that can make a difference for businesses.
1. Contract – They are the ones contractor need especially when bidding on large projects. They go to show that the organization has the capacity and financial ability necessary to manage and complete the projects at hand. It is not always that the bonds are required for contractors but they may be required to present them when bidding on government projects, big projects or when requested by customers to do so. Bonded contractors have better chances of nailing large projects. They include bid bond, performance bind and payment bond which together cover the complete project as appropriate.
2. Business – They differ from place to place and ensure businesses are responsible in fulfilling duties promised or offered to clients and also to the government by payment of bills and taxes. Different business categories need the bonds to show that their operations are trustworthy and financially responsible.
3. Court – In the legal industry, surety bonds also come into place. The most shared are those that individuals with court situations require to ensure defendants show up in court or to ensure payment as directed. In some other legal instances, legal clients may need bonds to perform different roles line becoming estate executors. The most shared are allurement bonds, estate bonds, injunction binds and guardian bonds.
4. Permit and license – They basically go to show that business owners and workers will to comply with local regulations set for the field they are involved in. for example plumbers need to to comply with plumbing codes and regulations within their localities and a license bond works as assurance that they will perform their duties as expected.
5. Commercial – These include different kinds of bonds that are not under construction and court surety bonds. The most shared include business service bonds, lease place bonds and commercial contract bonds among others.
They do come with lots of benefits depending on the field they are designed for. Bonded companies often gain a good reputation and are more likely to be trusted with projects compared to companies that are not bonded. If you are a contractor you must of course choose a surety bond provider that you can trust so the terms you to comply with are easy for you to keep up with. The above are the most shared but there are so many other types of surety bonds coming up with every passing day.