written instrument under seal whereby the signer, usually with his or
her surety or bondsman, guarantees to protect another's loss by guaranteeing
completion of the terms of the contract.
Indemnity bonds are an acknowledgment of an obligation to make
good the performance by another of some act, duty, or responsibility.
Indemnity bonds are usually issued by companies that assume risk
of performance by a bonded party for a fee.
Performance of the act, duty, or responsibility by the bonded party
discharges the obligation. The
bonding company retains right of subrogation against the bonded party.
Fidelity bonds protect an employer against losses sustained by
dishonest employees by guaranteeing faithful performance of duties by
employees. Performance bonds
such as construction bonds guarantee a builder's obligation to complete
construction. In such a contract,
the bonding company can be held liable for damages but not for specific
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