NAME
SCHEDULE BOND: A
fidelity bond which covers the employees listed in a schedule, each for
a specified amount.
OBLIGEE:
The party in whose favor a bond runs; the party protected by the bond
against loss. An obligee
may be a person, firm, corporation, government, or an agency of a
government.
OBLIGOR:
Sometimes called the principal, or one bound by the obligation. Under a surety bond, both principal and surety are in a
sense, obligors, since the surety must answer if the principal defaults.
OPEN DEFAULT BOND:
Where a judgment has been entered by default, the defendant may, under
certain circumstances, have the case reopened and tried on its merits,
upon giving a bond conditioned for the payment of any judgment that may
be rendered in the action.
OPEN PENALTY BOND:
A surety bond written without a limit on the liability of the principal
or surety. Under the
regulations of the federal government and the laws of many of the
states, surety companies are not permitted to obligate themselves on any
one bond for an amount greater than a specified percentage of their
capital and surplus (qualifying power).
OUTSIDE EMPLOYEE:
An employee, such as a salesmen, messenger, etc. whose duties keep
him/her away from his/her headquarters.
PENAL SUM:
The maximum amount for which a surety company may normally be held
liable under the bond. Also called the bond penalty.
See also limit of liability.
PERFORMANCE BOND:
A bond which guarantees faithful performance of the terms of a written
contractor for furnishing supplies or for construction of all kinds.
Performance bonds frequently incorporate payment bond (labor and
materials) and maintenance bond liability.
PERSONAL SURETY:
An individual who acts as surety for another, who may or may not charge
a fee for his/her guarantee, and usually is not regulated by any
government agency, such as is the corporate surety.
PETITIONING CREDITORS' BOND:
When a petition is filed to have a person adjudged a bankrupt, an
application is made to have a receiver or a marshal take charge of the
property of the alleged bankrupt prior to the adjudication, the
petitioners are required to give bond to indemnify the alleged bankrupt
for such costs, counsel fees, expenses, and damages as may be occasioned
by such seizure, in case the petition be dismissed or withdrawn by the
petitioners.
POSITION SCHEDULE BOND:
A fidelity bond which covers employees who may, while the bond is in
force, occupy and perform the duties of the positions scheduled in the
bond, each position being covered for a specific amount.
POWER OF ATTORNEY:
The authority given one person or corporation to act for and obligate
another, to the extent set forth in the instrument creating the power.
PREMIUM:
The fee to be paid for the bond.
The cost of the bond.
PRINCIPAL: The
one who is primarily bound on a bond furnished by a surety company.
PROBATE BOND:
One that guarantees an honest accounting and faithful performance of
duties by administrators, trustees, guardians, executors, and other
fiduciaries. So called
because such bonds are customarily filed in a probate court.
Also known as fiduciary bond.
PRO RATE CANCELLATION:
Cancellation of a bond when the portion of the premium returned is the
full proportionate part due for the unexpired period.
Distinguished from short rate cancellation.
PUBLIC OFFICIAL BOND:
A bond that guarantees faithful performance of duty of a public official
in a position of trust; also provides for an honest accounting of all
public funds handled by him/her.
Such bond is given to comply with a statute and, therefore, carries
whatever liability the statute imposes.
QUALIFYING POWER:
The largest net amount of risk which may be carried by a surety company
on a bond.
RATE: The cost of a
unit of bond coverage. Such
unit is usually in the denomination of $1,000.
RATE MANUAL:
A book published by the Surety Association of America or by individual
surety companies giving rates and classifications for bonds.
RECITAL:
That portion of a surety bond usually commencing with the word "Whereas"
which describes the transaction for which the bond is given.
In the case of a guarantee of a contract it generally incorporates the
contract by reference.
RECOVERY:
Reimbursement received by a surety from a reinsurer, or by a
subrogation, or from salvage following a loss.
REFUNDING BOND - RATE LITIGATION:
This term is applicable to any bond conditioned for future return, if
ordered, of money which the principal was allowed to charge and retain
pending final determination or decision in a contested matter.
REMOVAL BOND:
Where a case originally brought in a state court is removed to the
federal court, the defendant is required to give bond for the payment of
costs in federal court if the case is found to have been improperly
removed. Similar bonds may
be required on removal of a case from one state court to another.
REPLEVIN - PLAINTIFF'S BOND TO SECURE:
Replevin is an action to recover possession of specific articles of
personal property. The
replevin bond, which the plaintiff is required to furnish, is
conditioned for the return of the property, if return is ordered, and
for the payment of all costs and damages adjudged to the defendant.
REPLEVIN - DEFENDANT'S BOND TO
RECOVER PROPERTY REPLEVIED: Where personal property has been replevied, the defendant
may, by the furnishing of a bond, regain possession of the property,
pending final decision on the merits.
The bond is conditioned for redelivery of property to the plaintiff, if
ordered to do so, or otherwise to comply with a court order or judgment.
RETROACTIVE RESTORATION:
A provision in a bond whereby, after payment of a loss, the original
amount of coverage is automatically restored to take care of
undiscovered losses as well as future losses.
RIDER:
A printed form of special provision added to a bond.
Sometimes called an endorsement.
