The three parties to a surety bond
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Principal owes; obligee is owed and protected; surety guarantees.
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The party that requires the bond is the obligee, not the principal.
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Civ. Code §2787: surety = guarantor in California.
Bond loss payments vs. insurance loss payments
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Insurer keeps the covered loss; surety gets reimbursed by the principal (§2847).
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Reimbursement includes necessary costs and expenses.
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Bond amount caps the surety's aggregate liability, not the principal's (CCP §996.470).
Contract bonds
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Ask what is guaranteed: a contract, a payment, or a person's duties.
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Contract bonds: bid, performance, payment.
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CA Civ. Code §9550: public works over $25,000 → payment bond before work begins.
Financial guarantees and faithful performance bonds
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Financial guarantee = pays when an obligor fails to pay money (Ins. Code §12100).
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§105(d): financial guaranty may not be written as surety insurance.
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Official bond (Gov. Code §1501) also covers duties added by later laws.