Who or what is referred to as the obligee in a surety bond?

In the context of a surety bond, the obligee is the party that is protected by the bond. This means that the obligee is the entity that requires the bond as a guarantee that the principal (the party who will perform the work or obligation) will meet their contractual obligations. If the principal fails to fulfill those obligations, the obligee can claim against the bond for compensation or assurance of performance. This role is crucial as the obligee benefits directly from the surety bond’s provision of security and assurance that the principal will act in accordance with the agreement.

The other choices do not accurately describe the role of the obligee. The person making the guarantee is known as the surety or guarantor, while the company issuing the bond is the surety company itself. Lastly, the entity that receives the bond funds does not specifically define the obligee’s role in the surety bond arrangement.