Who is the party obligated to perform under a surety bond?

In the context of a surety bond, the party obligated to perform is the principal. The principal is the individual or entity that is responsible for fulfilling the obligations or duties outlined in the bond. This could involve completing a project, adhering to contract terms, or meeting specific regulatory requirements. The surety bond functions as a guarantee that the principal will honor these obligations, assuring the obligee that they will be compensated in the event of non-performance.

The obligee is the party that receives the benefits of the bond and is protected against the principal's failure to perform. The surety is the party that issues the bond and guarantees the principal's performance to the obligee. The beneficiary typically refers to an entity that is benefited by the execution of the bond but is not the primary party responsible for the performance. Understanding these roles is crucial to grasping how surety bonds operate within the context of contracts and obligations.