What is a Supply Bond?
A supply bond assures a purchaser/project owner (the obligee) that a contractor or supplier (the principle) will furnish materials or supplies in accordance with the terms of a contract. Principals usually submit supply bonds to obligees once they have been awarded supply contracts. The surety (bond company) is financially responsible to the obligee in the event that the principle fails to honor the contract. This financial obligation is limited by the terms of the supply bond, which is generally from 50% to 100% of the supply contract.
