What is the difference between a surety bond and a performance bond?

A surety bond and a performance bond are two different types of construction law-related bonds used in Washington state. A surety bond is a guarantee, or promise, between three parties: The surety, the one that provides the bond, the principal (usually the contractor), and the obligee (usually the owner). The surety is usually an insurance or surety company. The surety covers any losses the obligee suffers as a result of the principal’s failure to perform, or complete, the contract. A performance bond, on the other hand, is a guarantee that is given by a surety to an obligee that the contractor will fulfill their obligations. The principal must pay all costs if they do not fulfill their obligations. This bond can cover supplies and labor, but it is primarily used to ensure that a contractor finishes the project according to the contract agreed upon. In conclusion, a surety bond and a performance bond are two different types of bonds used in construction law in Washington state. A surety bond is a promise between three parties where the surety is responsible for covering any losses the obligee suffers due to the principal’s failure to perform. A performance bond is a guarantee from the surety to the obligee that the contractor will fulfill their contractual obligations.

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What is the difference between a surety bond and a performance bond?

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