What is one reason an obligee might require a surety bond?

An obligee may require a surety bond primarily to ensure payment for claims or damages. This is a fundamental aspect of the surety bond's purpose, as it provides a financial guarantee that the obligations outlined in a contract will be fulfilled. In cases where the principal (the party required to obtain the bond) fails to meet their contractual duties, the surety bond steps in to provide compensation to the obligee for any losses incurred. This safeguard instills confidence in the obligee, knowing that there is a financial backer who will assure them of compensation in case the terms of the contract are not met.

Other considerations, such as minimizing project costs, solidifying personal relationships, or ensuring project aesthetics, do not directly relate to the primary function of a surety bond. While project costs may be a concern for an obligee, the bond itself is not primarily designed for cost reduction, nor does it serve personal or aesthetic purposes. The essence of requiring a surety bond lies in the financial security it provides against potential defaults by the principal.