If a contractor fails to perform the work required by a construction contract, a surety bond can protect the client in the event of nonpayment. Alternatively, if a small business discovers an employee is skimming the books, a fidelity bond, commonly known as employee dishonesty insurance, can protect its bottom line. In both scenarios, fidelity and surety law are essential to finding a solution. Find out what these are and how an attorney can help.
To understand surety law, one first needs to understand surety bonds. Three parties enter into surety bonds: the surety, the obligee, and the principal. The bond exists to make sure the principal, usually a contractor or business, either performs a task or pays a debt. The obligee is the party to which that obligation is owed, often a government agency, owner, or another client. The surety is the insurance company that issues the surety bond and that would be liable for the failure to perform or the failure to pay.
Fidelity bonds are a form of business insurance, similar to a surety bond, that gives companies protection against dishonest employees. Modern fidelity bonds involve only two parties: the business and the surety. These parties are also sometimes known as the principal and the insurance company.
Litigation can occur at any phase of the surety bond process. Here are some scenarios of what could happen:
Fidelity litigation is equally common and can happen in the following situations:
Remember that the matter doesn’t have to reach the courts to need attorney involvement. Wanting to negotiate, settle, or even just receive counsel can more than justify involving a fidelity and surety law attorney. An attorney with expertise in construction, corporate, and commercial litigation can help communicate with the other side to reach a settlement. Or, if the time comes, go to court for a judge or jury to decide.
Whether the role involved is a principal, obligee, or surety in any of the above scenarios, Cokinos | Young has experience representing clients and reaching a resolution. Get in touch today for a free consultation with one of our experienced fidelity and surety law attorneys.