A Surety Bond is a three-party contractual agreement between (1) an Obligee, (2) a Principal, and (3) a Surety.
The Obligee imposes the bond guarantee requirement upon a Principal, as a condition precedent in order to:
Enter into a two-party contract with them, and/or
Be given legal authority (status), as required by law.
The Principal is obligated to perform the terms and conditions required by contract and/or identified by the laws.
The Surety provides a (1) prequalification analysis or/and (2) loss reimbursement to the Obligee; and backs [becomes jointly and severally liabile] the performance of the Principal.
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