obligee

Suretyship, also known as a guaranty, is a legal agreement where one party (the surety) assumes liability for the obligations of another party (the principal) to a third party (the obligee). The obligee is the one to whom another is obligated, and specifically, one who is protected by a surety bond.12

A surety bond involves three parties: the principal, the obligee, and the surety. The surety agrees to reimburse the obligee for losses resulting from the principal's failure to fulfill their obligations or from dishonesty. This differs from insurance, where coverage is for random events, and the insurer typically cannot recover losses from the insured. Surety bonds are often used to guarantee contract performance, the honesty of employees, or the faithful discharge of duties by public officials.3