Surety bonds issuance plays important role in the development of the economy. Almost in every part, surety bonds of different kinds are issued in different premiums. Nowadays, people started realizing the need of surety bond and obtain this surety bonds in different denominations. Generally in surety bond, hardly three people involved namely principal, obligee and surety for the bond. Surety plays important role in the surety bond because surety is a person who guarantees the obligee that the principal will perform his obligation without fail. Without surety guarantee, no surety bond will be issued. In surety bond, surety also compiles with the rules, laws and regulation framed as per the state and federal ordinance.

Surety guarantees the obligation and responsibility of the principal with respect to the words specified in the contract. When the principal fails to perform the obligation, the surety is also responsible for the default. The obligee has every right to sue against the principal and the surety in the court of law. In nonperformance of contract, the surety has to either completes the contract work or has to makes any payment for the losses suffered by the obligee for the nonperformance of contract. Surety will act as an intermediary between the contractor and the obligee. Therefore surety is an important and most required in the surety bond.