Construction Bond for Contractors

 A construction bond is a legal agreement issued by a surety (bonding company) and guarantees that a contractor will finish the job according specifications of a contract.

These bonds provide financial protection to the hiring party (Obligee) in the event a contractor (Principal) defaults on a job, does not complete the project in time, or fails to deliver up to adequate standard that was agreed before the construction contract started.

In the Canadian construction space, these bonds are often also called:

Contract bonds

Construction surety bonds

Contractor bonds

So, have you been asked to post a bond for a job?

First thing, there are 3 terms you need to know:

Surety – This is the bonding company that issues the bond

Obligee – This is who you are posting the bond for (hiring party)

Principal – You

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