Surety-bond meaning

The definition of a surety bond is a type of insurance that is purchased by someone who makes a promise to a third party, to protect the third party if the promisor does not keep his promise.

An example of a surety bond is a bond purchased by a contractor. If the contractor promises to build something for a customer and does not, the bond may pay out to the customer for money lost. The bond issuer would then try to recover that money from the contractor.

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A guarantee issued by a surety agency on behalf of a client, requiring the agency to pay a sum of money to a third party in the event the client fails to fulfill certain obligations.
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A bond issued by a com-pany on behalf of a person that guarantees the person will fulfill an obligation to a third party. If the person does not perform those duties, the third party is reimbursed through the bond for losses it suffers. Surety bonds may be used in cases where employees manage money or perform some other sensitive duties.
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(law): A bond issued by one party, the surety, guaranteeing that he will perform certain acts promised by another or pay a stipulated sum, up to the bond limit, in lieu of performance, should the principle fail to perform.
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(law): In a criminal case, the surety (bail) bond assures the appearance of the defendant or the repayment of bail forfeited upon the defendant's failure to appear in court.
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