Legal Bond: Everything You Need to Know
A legal bond is a written agreement where a person decides to perform a specific act, such as fulfilling a contract's obligations or appearing in court.3 min read
2. What Is a Surety Bond?
3. What Is an Appeal and a Bail Bond?
4. What Is a Judicial Bond?
A legal bond is a written agreement where a person decides to perform a specific act, such as fulfilling a contract's obligations or appearing in court. If they don't perform this act, they will have to pay the other party in the contract a certain sum of money or forfeit the money on a deposit. A bond legally binds someone to fulfill an obligation and gives reassurance that the compensation will be available if the duty is not fulfilled. A surety is often involved, which the bond makes responsible for any consequences of the person's behavior.
What Are Court Bonds?
A court bond is defined as all surety bonds a person needs when they're pursuing an action in court. Court bonds can be divided into fiduciary/private bonds and judicial bonds. The main difference is a judicial bond will pay a sum of money that would normally be required in a court case, while a fiduciary bond promises honest and faithful performance of a duty.
What Is a Surety Bond?
A surety bond is a three-party contract and is also known as a performance bond or a bid bond. This is where a party (or the surety, which is often an insurance company or bank) guarantees a contractor's customer (or obligee) that the conditions of the contract will be filled by the contractor (or obligor). If the obligor doesn't perform the contract terms, the customer will be paid a surety as compensation. A surety bond isn't the same as an insurance policy.
If the obligee cashes it, the amount is recovered from the obligor by the surety. In some transactions, it might be required to give a type of insurance that will perform the duties in the contract in a certain way or by a certain date.
Bonds often take the following forms:
- Performance bonds
- Bid bonds
- Payment bonds
Bid bonds make sure someone doesn't underbid a project, or if they do, that they'll still finish the project at the original price bid. Performance bonds make sure there is an accurate and timely performance of the contract according to the specifications. Payment bonds make sure a contractor pays its material men and subtractors and is created to protect the owner of a project from being liable in case nonpayment occurs.
What Is an Appeal and a Bail Bond?
An appeal bond goes to the losing party to execute the judgment of the court until the party's appeal goes to a higher court. A bail bond is used by someone who's been accused to guarantee their appearance in court when they're called on. A professional bail bond agent or defendant executes a document that promises to give up a sum of money that will be enough to ensure the defendant returns to court to go to trial. If they don't appear in court, the court will keep the money that's secured by the bond.
Since most people can't pay their own bail, they'll need to get help from a bail agent or bail bondsman, who will charge a nonrefundable fee that's equal to about 10 to 20 percent of the bail amount. The bail agent will be liable for the full bail bond amount if the defendant doesn't appear in court.
A warrant will also be issued for their arrest for skipping out on bail, and the bond amount gets forfeited to the court. The bail bondsman will then track down the defendant and bring them to court, so they get a refund of the bond. They often do this by hiring bounty hunters.
What Is a Judicial Bond?
A judicial bond gets deposited by a litigant to compensate the opposite governmental or judicial body from any loss that comes from the legal proceeding. These bonds are often used when going into a civil court proceeding. The bonds make sure the person is protected from potential losses that come from the court's decision. Judicial bonds can be divided into plaintiff bonds and defendant bonds. Defendant bonds stop a plaintiff's action from trying to satisfy their claim. They often allow the defendant to have control over the property.
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