Which type of bond is issued for individuals involved in contract construction?

The correct answer is surety bond. A surety bond is a legal agreement that involves three parties: the principal (the individual or company that needs the bond), the obligee (the party that requires the bond, often a government entity or project owner), and the surety (the bonding company that backs the bond).

In the context of contract construction, surety bonds are particularly important as they ensure that the contractor completes the project according to the terms of the contract. If the contractor fails to fulfill their obligations, the surety company will compensate the obligee for any financial loss up to the bond amount. This provides a measure of protection to project owners and encourages contractors to meet their contractual commitments.

Other types of bonds, such as performance bonds, are indeed related to construction but are a specific subset of surety bonds focused solely on ensuring the completion and performance of the contract. Fidelity bonds, on the other hand, protect against employee dishonesty or fraud, while blanket position bonds cover various positions within a company, rather than being tied to specific projects or contracts. These distinctions clarify why surety bond is the most appropriate choice in this context.