Hawaii Insurance Adjuster License Practice Exam

In the context of bid bonds, the contractor who is seeking a bid bond to secure a contract is termed the principal. The principal is the party that is responsible for fulfilling the obligations of the contract, which includes completing the project as agreed once the contract is awarded. Essentially, the bid bond protects the interests of the project owner by ensuring that the contractor will abide by their bid and enter into a contract if they are awarded the project.

The other roles involved in this scenario include the obligee, who is the party that requires the bond (typically the project owner), and the surety, which is the entity that issues the bond and guarantees that the principal will fulfill their contract obligations. The principal's responsibilities and risks are highlighted by the requirement for the bid bond, as it demonstrates the contractor's commitment to proceeding with the contract if they win the bid.