The principal, with regard to a surety bond, is the person or party that is required to perform the obligation in a surety bond agreement. The risk associated is based on the principal's ability to perform the required obligation. When the principal fails to meet the obligation, the potential for a claim on the bond arises.

The obligation to be performed by the principal varies based on the type of bond:

Commercial License and Permit bonds - The principal is typically the business or individual seeking a license or permit. The obligation being secured by the bond is the principal's adherence to applicable laws, rules and regulations.
Contract bonds - The principal is the individual or business being contracted to complete the job or project. The obligation being secured is the principal's completion of the contracted project or job.
Civil Court/Judicial bonds - The principal is the individual or business that has been given the requirement to post a bond in order to proceed with a legal process such as an appeal. The obligation being secured is the principal's acceptance and fulfillment of the court's judgment if the case does not rule in the principal's favor; e.g., a principal appealing a ruling may be required to obtain a surety bond to appeal a case that was not judged favorably.
Fiduciary Court/Judicial bonds - The principal is the individual or business being given the responsibility to manage the assets or care of another individual or business, e.g., an executor of the estate of a deceased person. The obligation being secured is the principal's adherence to the courts rules and guidelines for providing care and/or managing the protected assets.
Financial Guarantee bonds - The principal is the individual or business that is required to make payments to the obligee in accordance with a schedule or other predetermined manner. The obligation being secured is the future payments due in accordance with the payment schedule or plan, e.g. a commercial lease agreement bond secures the lease payments to the obligee.

Glossary / Principal

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