What type of bond is used to guarantee promises made by an individual or organization?

The type of bond that guarantees promises made by an individual or organization is known as a surety bond. A surety bond involves three parties: the principal, who is the party making the promise; the obligee, who is the party receiving the benefit of the promise; and the surety, which is the entity providing the guarantee that the principal will fulfill their obligation.

Surety bonds are commonly used in various contexts, such as construction projects, licensing requirements, and court proceedings, to ensure that the obligations will be met. If the principal fails to comply with the agreed terms, the surety can step in to fulfill the obligation or compensate the obligee for any losses incurred.

While performance bonds and fidelity bonds may sometimes seem similar, they serve different purposes. Performance bonds specifically ensure that a contractor completes a project as per the contractual agreement, while fidelity bonds protect against losses due to fraudulent or dishonest actions by employees. The broad term "bonds" does not specifically refer to the type that guarantees promises, making surety bonds the most accurate choice in this context.