Asurety bondis a financial guarantee that ensures a contractorfulfills their contractual obligations. If the contractorfails to complete the project, thesurety pays for the costs of re-tendering and delays.
Step-by-Step Explanation:
Definition of a Surety Bond:
Athird-party financial guaranteeensuring contract completion.
If a contractordefaults, the surety compensates the owner forre-tendering and delays.
Why Option B Is Correct:
Why Other Options Are Incorrect:
A (Full payment for all losses)– Suretydoesn’t pay unlimited amounts.
C (75% of costs covered)– Nofixed percentage applies.
D (Project value minus bid bond)– The surety coversactual financial damages, not fixed amounts.
[Reference:, Ontario Surety Association – Surety Bonding Principles, OACETT Professional Practice Guidelines – Financial Responsibilities in Contracts, ]
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