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A bond is an obligation, expressed in writing, to pay a fixed and liquidated sum on the happening or nonoccurence of a specified condition or event. Bonds are used in a variety of situations. The term "bond" includes investment bonds, penal bonds conditioned on the performance of duties of office, or other obligations undertaken by the principal obligor in the bond or collateral things to be done by the principal obligor; and indemnity and fidelity bonds or undertakings to indemnify the obligee against loss from conduct of the principal. A bond may be an insurance policy required by a court for the benefit of a trust or an estate. This policy provides insurance protection against the possibility of fraud or embezzlement by a trustee or an executor. The will maker may request in the will that no bond be required.
For example, any customer with a lien placed on his vehicle for unpaid repair work performed by a vehicle repair shop may have his vehicle released from that lien by filing a cash or surety bond with the clerk of the court in the circuit in which the dispute occurred. As another example, some states require public officers to obtain a bond to ensure the honest and faithful performance of their duties.
Bonds may be classified as being either statutory or private. The purpose and contents of a statutory bond are dictated by statute; a private bond is one that is not given pursuant to a statutory requirement.A bond is single if the obligation is to pay a fixed sum of money on a certain day. It is conditional if liability on the obligation is contingent on the principal's performance of particular acts, or, conversely, the principal's failure to perform particular acts. The basic parts of a bond, usually appearing in the order stated, are: (1) the obligation or promise to pay a specified sum, (2) the condition, if any, and (3) the testimonium clause, followed by the signatures.