The purpose of a security bond by a surety is to provide a guarantee or promise that a specific action or obligation will be fulfilled. It is a legally binding contract where a surety (such as a bank or insurance company) guarantees that a person or business (the principal) will fulfill their financial or contractual obligations. In case the principal fails to fulfill the obligations, the surety will be responsible for covering any losses.

The security bond serves as a financial protection for the obligee, the party that requires the bond. It is commonly used in various industries such as construction, real estate, and transportation, as a guarantee for the completion of a contract, compliance with laws and regulations, and ensuring that the Principal will perform their duties.

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