Indemnity Contract to Protect Surety,
How surety will remain safe form loss
The surety is the guarantor who takes the responsibility of the situation when the principal or the contractor fails to perform the duties taken up by him. The relationship of the contractor and the surety is generally cordial because both of them benefit from each other. But man a tie it might happen that the principal fails. In such a situation the whole load would come on the shoulders of the surety. So in order to protect the surety a contract is signed. This indemnity contract to protect surety is a great tool in case the principal faults on his part.
The surety does not choose anyone as a partner in business. There is a thorough background check including that of capital, capacity and character that will ensure a hardworking and reliable person. It is only after spending a lot of time and researching about the contractor that surety takes the guarantee of the contractor.
But if at all the circumstances are not in favour the surety will try to not suffer any losses unlike the other forms of insurance. It is the principal or the contractor that is directly liable for the fault the surety will bear the secondary liability. This is why to put the surety in a strong position the surety must sign indemnity contract to protect surety.
This contract will waive off any liability from the surety if at all the principal or the contractor defaults or breaches the bonded agreement. This will save the surety for sure.
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