A bond that is classified as a surety document ensures that the completion of a contract will occur despite a contractor’s default. In this case, the contractor is called the principal. If he or she does not satisfactorily complete a contract, the project owner or obligee is normally compensated for the financial loss.
Types of Contract Surety Bonds
A contract surety bond in Arizona comes in the following forms:
* A bid bond is used to ensure that a contract bidder will furnish the necessary payment and performance bonds if awarded contract work.
* A payment and performance bond ensures the completion of a contract in relation to the agreement’s terms and conditions. It also is secured to ensure that payment is made to subcontractors and suppliers.
* An ancillary or miscellaneous contract bond ensures that certain requirements not directly associated with performance are completed in a contract.
When a Contract Bond Is Required
A federal construction contract that is worth $150,000 or more must come with a surety bond as a condition for an award. Most private entities and municipal and state governments also have similar mandates.
Certain service contracts as well as some supply contracts also necessitate obtaining a surety bond. In order to purchase this type of bond online, you need to insert your contact details, select the bond type, and include the bond amount.
License Bonds
If you are a contractor and need a license bond, this type of surety bond falls under a different category and is found under the heading of “license and permit bonds.” However, you can find both license bonds and contract bonds underneath the heading of “Types of Surety Bonds.”
Where to Obtain Surety Bonds Online
If you have any questions about bond types or specific bond requirements, browse our website for further details and information. Make sure that you obtain the type of bond that you need for your specific type of work.