Bonds are provided as useful means of creating financial security for the Employer for the Contractor’s failure to perform his contractual obligations.
Generally, a bond is an arrangement under which the performance of one party (A) to another party (B) is backed up by a third party (C). What happens is that C promises to pay B a sum of money if A fails to fulfill the relevant duties. In this context A is commonly known as the principal debtor or simply principal; B is called the beneficiary; and C is called the bondsman, surety or guarantor.
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