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What are bonds?

The principal is the one primarily responsible for performing the obligation (the person hired to do the job), the obligee is the person to whom a duty is owed (the hiring person), and the surety is the one who provides the guarantee.

Bonds can definitely be confusing.  Essentially, the principal is the one primarily responsible for performing the obligation (the person hired to do the job), the obligee is the person to whom a duty is owed (the hiring person), and the surety is the one who provides the guarantee (the surety company).  Then there are different bonds to guarantee different things (ie. a bid bond guarantees that they will enter into the job at the bid price).

In the bid bond example above, the principal is the contractor bidding on the job and the obligee is the person hiring the contractor.

Although some of the terms vary, many students have found this video useful: