A surety bond Maryland is an insurance product that protects service consumer in the event that an individual or business they have contracted with falls through on their obligations. This type of risk management involves three different parties. The first of these parties is the principal, or the person or business whose services are to be rendered according to a contract with a consumer. The second of these is obligee, or the party who will benefit from the services rendered. The final party is the surety which is an organization which insures that the principal can perform the work as outlined in the contract between the principal and the obligee. A surety bond Maryland is purchased by the principal, but ultimately protects the obligee.
Often, a company or individual will require a surety bond Maryland before they will finalize a contract with a provider. In such a case, the surety issues the bond to the contractor according to a few stipulations. The principal must show adequate capability and experience to complete the job as outlined in contract. He must be able to do so according to the timeframe and payment schedule outlined in the contract. If the surety feels that the contract is reasonable and that the principal is capable of completing the work as outlined, they will issue the surety bond.
This process protects the obligee in a couple of ways. First and foremost it weeds out any unqualified contractors from contracting for work they are not reasonably able to perform. It also protects the obligee in the case that the principle defaults on their contract. In such a case, the obligee will receive a pre-determined payment to assist them in having the project completed by another service provider. Visit our website for more information.