SURETY BONDS (70) MOCK EXAM WITH ANSWER RATIONALES 2026

SURETY BONDS (70) MOCK EXAM WITH
ANSWER RATIONALES 2026

◉ Surety Bond.
Answer: 1. the contract that establishes this relationship


2. the contract that establishes this liability


◉ Principal (aka - Obligor).
Answer: agrees to fulfill an obligation


◉ Obligee.
Answer: party to whom the principal owes the obligation


◉ Surety (aka - guarantor).
Answer: promises to pay obligee if principal defaults


◉ Surety.
Answer: the party that becomes legally liable for debt, default, or
failure of another party

, ◉ Right of Recourse.
Answer: the surety's right to collect money from a principal who has
failed to perform as promised


◉ Salvage.
Answer: the surety's financial recovery from a principal who has
failed to perform as promised


◉ Collateral.
Answer: a principal's cash or valuable property kept in reserve by
the surety. in cause of default, it is forfeit to the surety


◉ Indemnitor.
Answer: a fourth party to a surety bond who agrees to reimburse the
surety for losses sustained if the principal defaults


◉ Joint Control.
Answer: When the surety and principal shar control of the bonded
project


◉ Penal Sum.
Answer: the specified maximum amount that a surety might have to
pay if the principal fails to perform as promised