Ensure the contractual obligations of all parties involved in any contract are clearly outlined and accounted for.
A surety bond promises to be liable for the debt, default, or failure of another. It is a guarantee that a company or individual will deliver on a specific obligation. It is a three-party contract by which one party (the surety) guarantees a second party's performance or obligations (the principal) to the third party (obligee).
Typically seen in construction or real estate markets, a performance bond, sometimes called a contract bond, is a type of surety bond. It provides financial protection against a project in the event of a default on the contractor's part.
Novation is the term for substituting an existing contract with a replacement contract where all concerned parties agree to the substitution. This new contract replaces the original contract terms and conditions with the newly outlined terms and conditions.