The surety bond market is incredibly diverse and the sheer number of bonds can be downright daunting. This can make the concept of surety bonds very frightening to many individuals. However, once you really begin delving into the bonds, you’ll find that they’re not all that complicated. In fact, there are two common types of surety bonds and both are commonly utilized throughout the country of Canada. Within this guide, you will learn about the contract surety bonds and the commercial surety bonds used in Canada.
Although the two groups are undoubtedly different to some degree, they also share some similarities. The most notable is the fact that all surety bonds involve three parties. If you’re somewhat familiar with surety, you’ll know all about the surety, principal and obligee. Regardless of the specific type of bond that you’re dealing with, these three parties will be present and they’ll always place the same role. At the same time, the surety bond will always protect one individual or group of individuals.
There are numerous construction companies in Canada and each of these will be required to obtain surety bonds from a surety bonding company like ConstructionBond at some point or another as they decide to bid on jobs. This is where the contract surety enters the picture. In this type of scenario, the contractor is responsible for obtaining the surety almost always. In the event that the contractor is unable to complete the job or cannot do so within a reasonable time period, the obligee will be protected. They’ll be able to file a claim against the bond and seek reimbursement for their losses.
When someone talks about commercial bonds they are referring to all bonds other than construction contract bonds. A commercial bond is obtained by Canadian businesses like Chubb to assure the government and public that the business will abide by the standards that are required by law. Commercial bonds can be broken down into several different categories such as license and permit bonds, tax preparer bonds, notary bonds, court/judicial bonds, and processor bonds.
Wrapping It Up
The truth of the matter is that contract surety and commercial surety are nearly identical. However, the biggest differences between the pair are why, where and how they’re used.