What is the importance of a surety bond for a business? Is it mandatory? Yes, it is a must for any person, firm, or company to get surety bonds if he/she wants to start a new business. Moreover, you are also required to have these bonds to secure your assets from mismanagement and fraud.
A bond is considered as an agreement between the two parties that a particular contract will be fulfilled. Therefore, in the contract, the terms and conditions will be mentioned. In most cases, the person who has placed the bond on you will be called the obligor. On the other hand, whom you want to insure is called the principal. Thus, when you enter into a contract with another party through an agent called a surety bonding agency, this acts as a legally binding agreement between the two parties.
Generally, there are four types of bonds available in the market. First is the contractual bond, which is the most popular type of bond. It can be offered either through a lawyer or a company to whom you entrust the contract process. Second is public official surety bonds, which are frequently provided by the people holding public offices such as lawyers, financial officers, etc.
The third is personal bonds, which can also be offered by a person who holds a particular position. Such people usually ensure that their transactions are carried out correctly and that they always verify their clients before giving them a contract. Fourth is the business bonds, which can also be offered by any person seeking a job.
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