Surety by Tinubu
Transforming surety with digital solutions
How does surety support trade?
How do surety bonds support trade?
Surety bonds are commonly used to protect and facilitate international and domestic contracts. A surety bond is a guarantee made between three parties; the Principal, the Obligee, and the Surety. The Surety company offers a financial guarantee to ensure that the Principal upholds their agreed responsibilities to the Obligee. If the Principal does not meet their obligations, the Obligee can claim payment of the bond from the Surety company.
Frequently asked questions about surety
Find out how surety bonds support trade.
How does a surety bond work?
Surety bonds work by guaranteeing that the Principal acts in line with contractual or legal obligations. If the Principal fails to do so, the Obligee makes a claim from the Surety company for losses up to the value of the bond. The Surety company can then seek reimbursement from the Principal.
What are the benefits of surety bonds?
Surety bonds are an essential facilitator of trade and growth. Surety improves liquidity and gives organizations the confidence to tender and start on new projects internationally and domestically by providing a payment guarantee and reducing risk exposure.
What is the difference between commercial bonds and contract bonds?
A contract surety bond is generally used to provide a guarantee against a formal contract to ensure the Principal meets their contractual obligations. A commercial surety bond is established to ensure the Principal complies with legal or government requirements.
What are surety bonds used for?
Surety is used for a range of reasons.
Types of surety bonds include:
- Bid bonds – to protect against failure to commence work,
- Performance bonds – where there is a risk that the Principal may fail to complete work,
- Advanced payment bonds – to enable access to advance payment in case of default.
Is surety an insurance policy?
A surety bond is different from an insurance policy. Unlike insurance, where the purpose is to protect the policyholder, surety covers a third party (the Obligee) against losses or damages caused by the bond purchaser (the Principal). The Principal can not make claims against the surety.