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Can you in layman's terms define what makes a surety bond common law versus statutory.

TexasConstruction Contract

I am a junior college student working on a presentation looking for a simple explanation that anyone could understand, possibly with some examples. As well as what/how are a surety's obligations defined and a breakdown of the penal sum of a performance bond.

6 replies

Nov 17, 2021
On its face the concept of “surety” seems simple; i.e. an individual or entity that accepts responsibility for the debt or obligation of another individual or entity if that other entity or individual does not pay the debt or perform an obligation. For example, in the construction industry we find surety bonds. Basically this an obligation by the surety to complete the project and pay the resulting costs because the contractor fails to complete the project. Another example in the construction industry involves a lien. Let us say that a subcontractor files a lien on the property because the subcontractor is not paid for work performed or supplies delivered. Someone, the property owner or the general contractor, will get a surety to guarantee the debt to thereby remove the lien from the property. Remember that despite the existence of the surety, the contractor or debtor can still contest the amount or even the existence of the obligation or debt. Incidentally, surety bonds are used extensively in public projects because neither a contractor nor a subcontractor can get a lien on public property. These are a some simple examples. In reality the field of surety law is extremely complex and the range of examples practically inexhaustible. If you want a simple discussion of surety law in the United States, go to Wikipedia and simply put in the term “surety”. There is also a good discussion at discussionhttps://www.suretybonds.org/learn/what-is-a-surety-bond. That site also has a few examples.
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Nov 18, 2021

The short answer is: A statutory bond is specified by a statute, such as Chapter 2253 of the Texas Government Code, or Chapter 53 of the Texas Property Code. 

A common law bond is established by contract for those instances where there is no statute governing the terms and effect of the bond. For example, a bond posted by a subcontractor would be a common law bond.

Good luck.

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Jun 22, 2023

As a fellow student, I understand the importance of clear presentation explanations. When it comes to surety's obligations, think of it as a promise made by a third party to fulfill a contract if the original party fails. For example, imagine you hire a contractor to build a house, and the surety steps in to finish the project if the contractor fails. The penal sum of a performance bond refers to the maximum amount the surety would pay in such situations. Learning about these concepts enriches our understanding of the academic field and prepares us for real-world scenarios. Moreover, when in doubt, go to https://edubirdie.com/edit-my-paper since this is a valuable source for me, for example, for many assignments. I study many laws, and I frequently ask these expert writers to edit my paper because it saves my time and gives reliable papers) 

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Jul 5, 2023

Surety's Obligations: The surety (like an insurance company) ensures that a job gets done. If the person hired (principal) fails, the surety steps in - they either finish the job or pay for the losses.

Example: If a builder doesn't finish your deck, the surety either hires another builder or pays you to do it.

Penal Sum of Performance Bond: This is the max amount the surety will pay if the principal fails. It's a percentage of the job's total cost.

Example: For a $100,000 job, if the penal sum is 20%, the surety pays up to $20,000 if the builder fails.

As for editing, check the provided link for services like proofreading and polishing language: https://writersperhour.com/paper-editing-service. This writing service might be helpful when you need help as a college student. 

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