Who is the party that guarantees performance by the principal in a bond?

In the context of bonding, the party that guarantees performance by the principal is the surety. A surety is typically an insurance company or a financial institution that provides a bond, which is a contractual agreement ensuring that the principal will fulfill their obligations as specified in the bond agreement. If the principal fails to perform their contractual duties, the surety is responsible for covering the obligations or ensuring performance, which may include compensating the obligee for any losses.

The principal, on the other hand, is the party whose performance is being guaranteed. The obligee is the party that receives the benefit of the bond and has the right to claim against it if the principal does not perform as agreed. The adjuster plays a role in evaluating claims but is not directly involved in the performance guarantee aspect of bonding. Understanding these roles is crucial in grasping how bonds function to protect the interests of the obligee and maintain accountability for the principal's actions.