submitted by RBiaggini 10 days ago (via suretybond-bg.blogspot.com)
A Performance Bond is a surety bond issued by an insurance company to guarantee satisfactory completion of, or performance on a project by a Contractor. These are generally three party agreements as outlined below:The Principal - the primary person or business entity who will be performing a contractual obligation.The Obligee - the party who is the recipient of the obligation.The Surety - who ensures (guarantees) that the principals obligations will be performed. Sureties are similar to (sometimes divisions of) insurance companies.For example, a General Contractor Principal may be required to provide a Performance Bond in favor of a project Owner Obligee in order to secure a certain contract. If the Principal fails to perform his or her duties under the contract specifications, the Obligee may call upon the Surety to cure the problem or make payment(s) out of the Performance Bond. These payments are for damages up to the limit of the Performance Bond.
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