What does a surety bond guarantee?

A surety bond serves as a promise that the contractor will perform their designated duties as specified in the contract. It acts as a form of security for the project owner, ensuring that the obligations outlined in the contract will be met. If the contractor fails to fulfill these duties, the surety bond provides a financial guarantee that can be used to compensate for the losses incurred by the project owner due to this non-performance.

This assurance fosters trust in contractual relationships within the construction and contracting industries, allowing projects to proceed with an understanding that the agreed-upon terms will be honored. Therefore, when a surety bond is in place, it specifically focuses on the performance aspect of the contract, ensuring that obligations are met as expected.