Surety is common in agreements where a party questions whether the counterparty will meet all requirements. The party may expect the counterparty to present a guarantor to decrease risk. In this case, the guarantor will enter into a suretyship contract.
This seeks to decrease risk to the lender and this might decrease the interest rates for the borrower. A surety can be in form of a surety bond-a legally binding agreement between three parties. These bonds seek to protect private or public interests from a third party’s actions.
They offer financial guarantees that the completion of agreements and other business deals will occur in mutual terms. Furthermore, they protect government entities and consumers from malpractice and fraud. Here’s what you should know about the parties that make up this bond.