A surety bond is a guarantee by a third party that a business or individual will deliver on a job according to the agreed-upon terms. In some situations a bond is required by law, but acquiring a surety bond in New Jersey even when it is not strictly necessary assures the public that that the company is responsible and reliable. Contractors get bonded to ensure that projects are handled competently and completed in a timely manner. Bonds commonly associated with construction include:
- Bid bonds. These guarantee that a bid for a project is submitted in good faith and that the work will be done as promised.
- Performance bond. This bond protects owners from financial loss in the event a contractor fails to finish a project.
- Payment bond. According to this agreement, people working with a contractor, such as a supplier, will get paid even if work is interrupted.
- Labor and materials. This is typically sold in conjunction with a performance bond, and covers cost of equipment.
- Maintenance bond. This bond guarantees against defective work for a specified time after completion of the job.
Bonds Protect the Public
While a surety bond in New Jersey is not intended to protect a contractors and other businesses from financial loss, it benefits them in important ways. Bonds let people know that a business is invested in making good on its promises.