Common Contracts

Introduction

Surety Bond Agreement • January 25th, 2017

• Contract Type
  Surety Bond Agreement
• Filed
  January 25th, 2017

Before signing a surety bond, a contractor (including subcontractors) needs to understand the meaning of the surety bond’s terms. A surety bond is a three-party agreement in which one party secures a second party’s performance to a third party. Contract surety bonds secure the performance of construction contracts. A performance bond secures, for the benefit of the project owner, the contractor’s performance of the contract. The payment bond secures, for the benefit of certain subcontractors and suppliers, the contractor’s obligation to pay those subcontractors and suppliers. If there is a default in the underlying obligation (the construction contract), the surety steps in to remedy that default.