A surety is a promise or agreement made by one party that debts and financial obligations will be paid. In effect, a surety acts as a guarantee that a person or an organization assumes responsibility for fulfilling financial obligations in the event that the debtor defaults and is unable to make payments. The party that guarantees the debt is referred to as the surety or the guarantor. Sureties can be made by issuing surety bonds, which are legal contracts obligating one party to pay if the other fails to live up to the agreement.
- A surety is a promise that financial obligations will be met if one party defaults.
- A surety is made by a person or party that takes responsibility for the debt, default, or other financial responsibilities of another party.
- Sureties are used in contracts in which one party’s financial holdings or well-being are in question and the other party wants a guarantor.
- Surety bonds tie the principal, the oblige (often a government entity), and the surety.