Term of the Day

bond

1. A written and signed promise to pay a certain sum of money on a certain date, or on fulfillment of a specified condition. All documented contracts andloan agreements are bonds.
2. Construction: A three-party contract (variously called bid bond,performance bond, or surety bond) in which one party (the surety, usually abank or insurance company) gives a guaranty to a contractor’s customer(obligee) that the contractor (obligor) will fulfill all the conditions of the contract entered into with the obligee. If the obligor fails to perform according to the terms of the contract, the surety pays a sum (agreed upon in the contract and called liquidated damages) to the customer as compensation. A surety bond is not an insurance policy and, if cashed …
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Usage Example
Governments issue bonds on a regular basis to finance projects and activities when they do not have the funds on hand to do so.
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