Which party is typically liable for the bond amount if the principal defaults?

In the context of surety bonds, the party that is typically liable for the bond amount if the principal defaults is the surety. A surety bond involves three parties: the principal, who is responsible for fulfilling a duty (such as a contractor performing work), the obligee, who is the party that requires the bond (often the entity that benefits from the contract), and the surety, which is the company that backs the bond.

When the principal defaults on their obligations, it is the surety that steps in to fulfill those obligations. This means that the surety will compensate the obligee up to the amount of the bond. The surety assumes the risk of the principal's failure to perform, which is why they are liable for the bond amount. This arrangement serves to protect the obligee from financial loss due to the principal's default while also holding the principal accountable for their obligations to the obligee.

In contrast, the other parties—like the obligee, agent, or contractor—do not have the same liability for the bond amount in the event of the principal's default. The obligee benefits from the protection of the bond, while the agent typically acts as a facilitator or intermediary but does not bear the financial risk associated