SURETY BONDS (70) HIGH-YIELD CONTRACT
AND RISK MANAGEMENT SUMMARY 2026
◉ A bond provides this assurance of
Answer: credit backing
◉ What are bonds?
Answer: Bonds are different than insurance where loss is expected
and there is a pool of money to cover the event. Bonding companies
do not expect to be paying losses, but at times, they financially
support a contractor and even complete projects.
◉ Banks bond employees to
Answer: recover losses of embezzlement or theft
◉ What are bail bonds?
Answer: ¨Post a bond to appear in court for a criminal charge
◉ What is the broad principle behind construction surety bonds?
Answer: Bonds are employed where persons deal with individuals
or organizations of doubtful financial capacity
, ◉ Surety
Answer: Is a professional bonding company
◉ Obligee
Answer: Owner or in case of subcontractor bond, General Contractor
◉ Principal
Answer: Prime contractor or in case of subcontractor bond,
Subcontractor
◉ Surety Bond transaction
Answer: ¤"Surety" is obligated to perform or pay specified amount
of money to the "OBLIGEE" for non-performance of the principal
◉ Bond issued to owner
Answer: "OBLIGEE" even though the application for the bond has
been made by the general contractor (differs from ordinary contract
procedures)
◉ Under statute of frauds, surety is not held unless the bond is
Answer: in writing
◉ Surety companies are held to higher standards than
AND RISK MANAGEMENT SUMMARY 2026
◉ A bond provides this assurance of
Answer: credit backing
◉ What are bonds?
Answer: Bonds are different than insurance where loss is expected
and there is a pool of money to cover the event. Bonding companies
do not expect to be paying losses, but at times, they financially
support a contractor and even complete projects.
◉ Banks bond employees to
Answer: recover losses of embezzlement or theft
◉ What are bail bonds?
Answer: ¨Post a bond to appear in court for a criminal charge
◉ What is the broad principle behind construction surety bonds?
Answer: Bonds are employed where persons deal with individuals
or organizations of doubtful financial capacity
, ◉ Surety
Answer: Is a professional bonding company
◉ Obligee
Answer: Owner or in case of subcontractor bond, General Contractor
◉ Principal
Answer: Prime contractor or in case of subcontractor bond,
Subcontractor
◉ Surety Bond transaction
Answer: ¤"Surety" is obligated to perform or pay specified amount
of money to the "OBLIGEE" for non-performance of the principal
◉ Bond issued to owner
Answer: "OBLIGEE" even though the application for the bond has
been made by the general contractor (differs from ordinary contract
procedures)
◉ Under statute of frauds, surety is not held unless the bond is
Answer: in writing
◉ Surety companies are held to higher standards than
