Bonds are a written agreement in which one party, the surety, guarantees the performance or honesty of a second party, the principal (obligor), to the third party (oblige) to whom the performance or debt is owed.

Surety Bonds are three-party agreements in which the issuer of the bond (the surety) joins with the second party (the principal) in providing protection to a third party (the obligee) regarding fulfillment of an obligation on the part of the principal. An obligee is the party (person, corporation or government agency) to whom a bond is given. The obligee is also the party protected by the bond against loss.