Surety Bonds

Three Party Agreement

Ranked among the top national sureties in the United States, Merchants Bonding Company has honed its expertise in providing contract and commercial surety bonds for nearly a century. A surety bond is a three-party written agreement by which one party (the surety) guarantees another party (the obligee) that a third party (the principal) will perform according to the bond, statute, contract or other obligation. The surety bond protects the obligee by guaranteeing performance to the obligee if the principal does not fulfill their obligation.

Surety

Obligated to be liable for the performance, debt or failure of a duty of another party.

Obligee

Protected by the bond. The one to whom the principal, and subsequently the surety, has become obligated.

Principal

Bound by contract, statute or other means to the obligee to perform or pay a debt.

Categories of Surety Bonds

Contract Surety Bonds

Contract surety bonds provide financial security and construction assurance on building and construction projects. Contract surety bonds generally include bid bonds, performance bonds and payment bonds.

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Commercial Surety Bonds

Commercial surety bonds are an agreement between a principal and an obligee that a certain obligation will be performed. A wide range of bond types comprise commercial surety bonds including license and permit, notary, probate, court and public official bonds.