Commercial Surety Bonds
In addition to construction bonds, Approved Surety can facilitate a variety of Commercial Surety Bonds.
Commercial surety bonds guarantee the obligee (typically a provincial or federal governing body) that the principal (a business or individual) will perform duties in compliance with governing acts, regulations and/or by-laws. If the principal fails to comply with the regulations, the surety provides remedy under the bond.
Commercial bonds are comprised of the following major classes of bonds: Customs and Excise, License and Permit, Fiduciary, Lost Document and various special commercial bonds.
Commercial Bonds have proven to be a cost effective method of ensuring compliance with a variety of important laws and regulations.
Commercial Surety Bonds represent the broad range of bond types that do not fit the classification of contract. Please see below for a practical and informative breakdown of the most common Commercial Surety Bonds:
US CUSTOMS AND EXCISE BONDS
The US Customs bond protects the federal government (obligee) against non-payment of duties and taxes by companies (principal) whom are importing and exporting goods into and out of Canada. A party that imports merchandise into the US or transports imported goods through the US must provide a surety bond (customs bond) to US Customs and Border Protection to guarantee payment of various duties, tariffs and excise taxes.
There are two basic types of Customs Bonds:
Single Transaction Bond – Also known as a Single Entry Bond or SEB, a single transaction bond is almost self-explanatory by name. It covers a single import transaction at one port of entry. The total bond amount is determined by the type of bond needed, as well as the limit of liability required by U.S. Customs.
Continuous Bond – A continuous bond covers all entries made by an importer at all U.S. ports of entry. The most common amount for a Continuous Bond is $50,000.00, which is the least amount allowable by U.S. Customs. The amount of a Continuous Bond is generally 10% of the importer’s annual estimated duties for the next calendar year and is good for one complete year.
Additionally, a continuous bond may allow importers’ shipments to be cleared through Customs with greater ease.
Examples of Customs and Excise bonds include:
- Freight Forwarder/Logistics Bond
- Bonded Carriers (highway, air, freight)
- Customs-Bonded Warehouse
- Customs sufferance
- Temporary Importation of Articles Bond
- Duty-Free Shop Bond
- Release of Goods Bond
LICENSE AND PERMIT BONDS
License and Permit Bonds are a general class of surety bonds required as prerequisites to receiving a license or permit to engage in certain business activities. Governments at all levels often require license and permit bonds for businesses and activities that involve some risk to the public. They assist to qualify a business to engage in a particular operation and can be required for the reimbursement of certain taxes, fees or providing consumer safety.
This type of surety bond protects consumers against fraud and misrepresentation on the part of the principals. These surety bonds are payable to various licensing bodies, including both provincial and municipal governments. (obligee).
Thousands of unique license and permit bond types exist, but the following are some of the most commonly requested:
- Consumer Protection
- Collection Agent
- Motor Vehicle Dealers
- Real Estate Brokers
- Contractor’s License
- Employment Agency
- Fuel tax
A Fiduciary Bond is a bond that guarantees a court-appointed fiduciary, an executor or guardian, will perform all duties. A fiduciary is someone who agrees to take care of the property or needs of another person, to that person’s benefit. This type of bond is required by the court in order to protect the person for whom the fiduciary is acting. These are also known as executors or guardians. The fiduciary is an important figure and should be one of utmost integrity, who is above all, trustworthy. A fiduciary’s responsibilities could range from managing an estate to giving financial advice.
A fiduciary bond is required by the court in order to protect the person for whom the fiduciary is acting, such as a ward or invalid. A fiduciary bond is also known as a probate bond and may be one of many types: guardianship bonds, conservator bonds, administrator bonds, receiver bonds, executor bonds, and trustee bonds.
LOST SECURITIES/INSTRUMENT BONDS
Lost Securities/Instrument bonds are required when a person or corporation has lost, mislaid or destroyed an original document that documents proof of ownership. Such instruments can be certificates of stock ownership, life insurance policies, common or preferred stock as well as federal, provincial, municipal or corporate bonds. Before issuing a replacement, financial institutions want to be protected should both the original and replacement still exist, in order to avoid the possibility of both being cashed, either accidentally or fraudulently.
The bond of indemnity, as it is also called, provides that the issuer of the replacement security will not suffer economic loss should the lost instrument turn up later.
When this happens the issuing corporation requires that the registered owner of said certificate(s) post security in the form of a Lost Securities Bond so that the issuing corporation may provide a replacement certificate.
There are hundreds of types of Commercial bonds and numerous bond wordings. Please contact us to discuss.