What are the three parties to a surety bond?

The three parties to a surety bond are the principal, obligee, and surety. The principal is the party that is required to fulfill an obligation or duty, often represented by a contractor completing a project. The obligee is the party that requires the bond, usually to guarantee that the principal will perform as agreed, providing them with a level of security. The surety is the entity, often an insurance company, that backs the bond and guarantees the obligee that the principal will fulfill their obligations. If the principal fails to do so, the surety is responsible for compensating the obligee, thus ensuring the performance of the contract or agreement. This tripartite structure is crucial in the surety bond context as it helps define the roles and responsibilities of each party involved in the bond transaction.