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Origins of Surety & Surety Bonds
Banking, insurance and surety in their most primitive forms are recorded in the business commerce records of ancient Sumer and Phoenicia. The concept of surety is perhaps the oldest as it was used to bind oral contracts in the absence of the written word. We know that the Bible contains numerous recordings of "striking hands" or what could only be described as an ancient, oral, bail bond obligation. One example is Genesis 43:9 KJV, "I will be surety for him; of my hand thou shalt thou require; if I bring him not unto thee then let me bear the blame forever". Other Biblical references alert to the risks of being surety for someone: in Proverbs 11: 15 (KJV) "He who is surety for another shall smart for it but whoever refuses to strike hands in pledge is safe." One of the oldest written accounts of a contract bond is a forty five hundred year old Sumerian performance bond, recorded by a merchant who had given his daughter in marriage to a merchant in India. The journey was too long for any of the Sumerian merchant's family to accompany the daughter so he contracted with the chief of a caravan traveling to India to deliver her safely. The caravan chief furnished a written bond backed by another Sumerian merchant guaranteeing the daughters faithful delivery unharmed. While the origin of modern insurance began in a London coffee house (Lloyds) in the late 17th century, the first attempt at modern corporate surety began in the appropriately named "Devil Tavern" also in London around 1720. Organized to cover the fidelity of household employees, in current industry language, a fidelity bond or employee dishonesty bond; the company never fully subscribed its stock and never opened for business. It was not until 1837-40 that "The Guaranty Society of London" was organized as the first corporate bonding company providing dishonesty bonding. A principal reason for the delay in the formation of a corporate surety industry is corporate bonding (backed by a business entity) lacked the moral security of an individual bond. At that time the reliability of a corporation was not considered as strong as that of an individual. In North America the concept of corporate surety took even longer to develop. Dishonesty bonds were once again the first product line or branch of surety to be offered with the charter, in 1872, of a Canadian bonding company, The Guaranty Company of North America. This company is still presently writing all types of surety bonds in both Canada and the U.S. In 1875, the first successful U.S. surety was issued a charter which later became the Fidelity and Casualty Company. While the Federal government had required indemnity bonds on federal contracts since March 2, 1799, those bonds were exclusively provided by individual bondsmen. In August 1894 with the passage of the Heard Act, the U.S. Government formally recognized corporate surety bonds authorizing bonding companies to write bonds on Federal contracts. In 1935 the Heard Act was replaced by the Miller Act which is the current statute governing corporate suretyship in the United States. This act requires payment and performance bonds on federal construction projects over $100,000. Individual sureties are still accepted on Federal contracts however most bonds are now written by corporate sureties. For more information on surety bonds contact an insurance agency specializing in surety bonding. Surety Advisors, LLC, www.suretybondservices.com, is a bonding agency in Houston, Texas whose specialty is contract, license, permit, probate, court and fidelity bonds. |
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IMPORTANT NOTE: While we specialize in Surety Bonds, this Website provides only a simplified description of bonds and is not a statement of contract. Wording may not apply in all states. For complete details of bonds and conditions, be sure to read the bond, including all endorsements, or riders, if applicable. Bonds CANNOT be bound, amended, or altered by leaving a message on, or relying upon, information in this Website or through E-Mail.
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