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The Curious Bag
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Surety bonds are essentially contracts with three parties, one of which is a surety bonding company. The other two parties will vary depending on the circumstances, but in all cases, the surety is guaranteeing the performance of one of the other parties.
First Party
The first party of a contract for a surety bond is the person or entity requiring the bond as a condition of doing business with another individual company. The first party is frequently a government agency, but often includes private property owners.
Second Party
The second party is the person who needs the bond to engage in business or sign a contract. Construction contractors, notaries and insurance brokers are examples of business persons who cannot obtain a license in their profession without first obtaining a surety bond.
Third Party
A surety is the third party to the contract and will almost always be a corporation. Corporate surety companies have existed in the U.S. for more than one hundred years.
Issuance of Bond
The surety will issue a bond upon successfully qualifying the applicant, which will involve a thorough background check and review of the applicant's financial condition.
Benefits
A successful surety bond applicant who continues to conduct his business according to best industry standards will want to continue his relationship with the bonding company as assurance to others of his qualifications.
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