Who are the parties involved in a surety bond?

In a surety bond, the parties involved are the principal, the surety, and the obligee. The principal is the party that is required to fulfill an obligation or duty, such as completing a construction project or meeting contractual agreements. The surety is the entity that provides the bond, guaranteeing that the principal will perform as promised. If the principal fails to meet their obligation, the surety is responsible for compensating the obligee as specified in the bond terms. The obligee is the party that benefits from the surety bond, typically the individual or organization requiring the bond to ensure that the principal meets their contractual obligations.

This structure is critical in construction and various contractual agreements, as it provides a safety net for the obligee against potential default by the principal. The other options reflect different types of relationships and obligations but do not accurately represent the three essential parties to a surety bond.