Surety bonds are not limited to a specific contract. The scope of the contract guaranteed by the Surety is outlined in the bond form.
Each state or jurisdiction has its surety bond form language to enforce the bond lawfully. Bond forms can be obtained at a specific state agency or regulation department.
To understand the type of surety bond that you need to obtain, you need to be familiar with the core elements of a bond form:
- Bond Number: This is the surety bond number on the top of the form on all final bonds.
- Principal Name: The legal name of the Principal. The name must match the underlying agreement, application, or proposal. The principal’s name is NOT the same as the parent company.
- Surety Name: The legal name of the Surety Bond Company/Provider. Bond companies may have more than one writing entity.
- State of Incorporation: Some bond forms require the state of incorporation for the surety. State of incorporation may also be required for the principal.
- Obligee Name: This is the legal name of the entity or party requiring the bond.
- Bond Liability Amount: Most bond forms require the bond liability amount to be written out as well as numerically indicated.
- Signed Sealed Date: This is the effective date of the bond. The actual date the bond is being executed should be used unless there is a specific contract date required per the underlying agreement or regulation.
- Bond Requirement: Some forms provide a blank space for you to describe the act or performance being guaranteed, i.e., “supply of Widgets,” while other forms may be pre-printed for you by the Obligee.
- Principal Signature Name: This is the legal name of the person signing the bond on behalf of the corporation. The name and title of the person should be typed under the signature line. Some Obligees require that a corporate officer sign the bond form. Typically the corporate president signs and the corporate secretary will attest the president’s signature.
- Surety Name: The legal name of the Surety should be typed above the signature line.
- Attorney-in-Fact Name: Your legal name as it appears on the surety’s Power of Attorney and the title “Attorney-in-Fact” should be typed under the signature line.
- Corporate Acknowledgment and Surety Notarization: Most forms that require acknowledgment or notarization provide a space for it on the bond form. However, all bonds issued for an Obligee in need both the Surety Notarization and Corporate Acknowledgment whether specified on the form or not.
- Seal the Bond: The surety’s corporate seal is affixed to the bond. If required by the Principal, the client must be advised to sign and seal the bond accordingly.
- Power of Attorney: The person that has been granted signing authority should carry a valid Power of Attorney. To make the bond form legal and binding, the Power of Attorney must be attached. It must include all details, such as sealed dates on the bond form with an active notary seal.