Nature and Benefits of Individual Surety

2008-11-24 13:52:29

( Financial )



Contingencies in Transactions and Business Relationships

In business, two or more parties enter into contracts or agreements, usually where one party is to provide goods or services to another.

No matter how well-meaning these parties are with each other, there is always the possibility that things could go wrong. You may have had the full intention of completing a project contract, but circumstances such as financial crises or even acts of God can deter you from delivering what you have promised.

Or you may have expected someone to deliver or provide you with the merchandise or service, but he may not have been able to do so, whether it was through his own fault or not. One person's failure to comply causes emotional and physical distress for the wronged party or for both parties, and may lead to costly lawsuits.

Nature of Individual Surety Bonds

In order to avoid the consequences of failure to meet contracts and obligations, the delivering party should purchase an individual surety bond. This means the contractor or provider of the goods or services.

Individual surety bonds serve as a type of insurance cover against failure of compliance. They guarantee that the provider will do his best to comply with all the terms of the agreement or compensate for any losses to the buyer in case things go wrong.

There are many different types of individual surety bonds, depending on the exact one that will serve your purpose. For instance, contractors submit surety bonds to assure their clients that they will be able to build the structure within the agreed time period, and to the satisfaction of the client.

A jail bond assures the court and the jail that someone with a pending case will duly report to the court at the appointed time and not try to escape the law.

Benefits of Individual Surety Bonds

If you are the service or goods provider, you are showing the other party that you can be trusted to deliver what you have promised. You are proving your sincerity and trustworthiness in fulfilling your responsibilities. Thus, you have the edge over non-bonded competitors.

And while individual surety bonds do cost money, they are still worthwhile investments, as they provide monetary compensation to wronged parties and are therefore able to prevent lawsuits which are costlier.


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