What is one possible consequence of a principal's default on a surety bond?

The correct choice indicates that, in the event of a principal's default on a surety bond, the surety may be required to fulfill the principal's obligations. This is a fundamental principle of how surety bonds function. A surety bond involves three parties: the principal (the party that must perform), the obligee (the party to whom the obligation is owed), and the surety (the guarantor of the principal's performance).

When the principal defaults—meaning they fail to meet their contractual obligations—the surety is responsible for stepping in and ensuring that those obligations are met. This can involve performing the work itself or providing financial compensation to the obligee. The surety essentially acts as a safeguard for the obligee, assuring them that they will not suffer financial loss due to the principal’s failure.

This feature of surety bonds is critical to their purpose and provides confidence to the obligee that they have recourse if the principal does not fulfill their contractual responsibilities. Other options do not accurately reflect the dynamics of surety agreements or their implications upon default.