What does "bond forfeiture" mean?

Bond forfeiture refers to the situation where the surety pays a claim that has arisen from a bond and then seeks to recover those costs from the principal, who is responsible for fulfilling the obligations under the bond. This process occurs when the principal fails to meet the terms of the contract or agreement that the bond was meant to secure, prompting the surety to step in and cover the claim.

The surety’s payment does not absolve the principal of their obligations; rather, it allows the surety to pursue the principal for reimbursement, thereby enforcing accountability for the terms of the bond. This notion highlights the relationship among the principal, surety, and obligee, emphasizing the surety's role as a guarantor in the bond agreement.

Other choices detail different scenarios related to bonds, but they do not encapsulate the concept of bond forfeiture as accurately as the correct answer. For example, working without a bond does not pertain to forfeiture, nor does the issuance of a new bond or cancellation of a bond. The key aspect of bond forfeiture is that it involves the surety’s payment in response to a claim and the subsequent pursuit of that payment from the principal.