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Simple English definitions for legal terms
statutory bond
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A quick definition of statutory bond:
Statutory bond: A type of bond that is required by law. It can serve different purposes, such as ensuring that a contractor will complete a project or that a public official will perform their duties honestly. Statutory bonds are often used in the construction industry and in government contracts.
A more thorough explanation:
A statutory bond is a type of bond that is required by law. It is a legal agreement between three parties: the principal (the person or company that needs the bond), the obligee (the person or company that requires the bond), and the surety (the company that provides the bond).
There are two types of statutory bonds:
- License and permit bonds: These bonds are required by government agencies to ensure that businesses and individuals comply with laws and regulations. For example, a contractor may need a license bond to ensure that they will follow building codes and regulations.
- Court bonds: These bonds are required by courts to ensure that individuals comply with legal decisions. For example, a person who is appointed as a guardian may need a court bond to ensure that they will act in the best interest of the person they are appointed to protect.
Examples of statutory bonds include:
- A contractor's license bond
- A notary public bond
- A guardian bond
- A probate bond
These examples illustrate how statutory bonds are used to ensure that individuals and businesses comply with laws and regulations, and to protect the interests of others. For example, a contractor's license bond ensures that the contractor will follow building codes and regulations, which protects the safety of the public. A guardian bond ensures that the guardian will act in the best interest of the person they are appointed to protect, which protects the vulnerable person from harm.