What is the main difference between a contract surety bond and a license and permit bond?

The primary distinction between a contract surety bond and a license and permit bond lies in their purpose and function. Contract surety bonds specifically ensure the performance of contracts, meaning they guarantee that a contractor will fulfill the terms and conditions of a contractual agreement. This type of bond safeguards project owners and clients by assuring that the obligations outlined in the contract will be met, such as completing work on time, adhering to specifications, and complying with all relevant laws.

In contrast, license and permit bonds are typically designed to ensure that individuals or businesses comply with the regulations applicable to their profession or the operation of their business. These bonds provide a guarantee that the bonded party will follow the laws, rules, and regulations pertinent to their licensing or permitting requirements, thereby protecting the public from potential misconduct.

By focusing on the performance assurance aspect, contract surety bonds play a crucial role in construction and service industries, while license and permit bonds serve as a regulatory compliance mechanism at the individual or business level. This highlights the specific role of each bond type within their respective contexts.