What is a contract bond and when is it required?

A contract bond is a type of surety bond used in construction law in the state of Washington. It is a guarantee between three parties – the principal party (usually the contractor or subcontractor), the surety (an insurance company), and the obligee (the project owner) – that the principal party will fulfill its obligations under the contract. It also guarantees that the principal will compensate the project owner for any financial losses due to the contractor’s failure to do so. Contract bonds are usually required when a contractor is performing large-scale construction projects. This is because there is a higher risk involved due to the investment it takes to complete the project. The surety bond provides the owner with the financial protection they need, in case the contractor fails to follow through on their contract. The principal party must obtain the bond before they are allowed to begin work on the project. The bond must be signed and approved by the surety company and the owner. This ensures that the contractor is financially liable and can make good on the contract. Contract bonds are an essential tool for project owners, providing them with the peace of mind that their investment is secure. Furthermore, they ensure that contractors fulfill their obligations and provide quality workmanship on large-scale construction projects.

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What is a contract bond and when is it required?

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