What role does the principal have in a Surety Bond?

In the context of a Surety Bond, the principal is the party that purchases the bond and is responsible for fulfilling the obligations outlined in the bond agreement. This role is crucial because the principal ensures that the terms agreed upon with the obligee (the party that requires the bond) are adhered to. If the principal fails to meet these obligations, the surety (the entity that issues the bond) is responsible for compensating the obligee for any losses incurred. Therefore, the principal's role is central, as they are directly accountable for the actions that the bond seeks to guarantee. This understanding highlights the importance of the relationship between the principal and the other parties involved in the Surety Bond structure.