Surety bonds are an essential aspect to many legally binding contracts. Most contracts have two legal parties: the principal, who is the one performing a task, service, or contractual obligation, and the obligee, who is the recipient of the obligation. Surety bonds introduce a third party into the mix, the surety. It is the surety’s responsibility to provide a kind of insurance for the obligee. If the principal is unable to meet the obligations outlined in the contract, the surety steps in to protect the obligee against losses.
Where to get surety bonds
The best place to contract Surety bonds is through a licensed surety bond agency. A skilled agent can help write a legally binding surety bond that all parties involved in the contract can agree on. He or she will even meet with your account and attorney to make sure the contract is viable.
When to use surety bonds
Bonds are frequently used when hiring licensed contractors for a project, and the construction industry is one of the most common places to find Maryland bonds in use. If you are planning a construction project, adding a surety bond can help you in the event that the contractor does not fulfill his or her contracted duties. This can happen more often that you think, with the most common cause for non-fulfillment being the contractor going out of business.