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In the prepared article examines and analyzes the main problems of using a surety bond and other types of ensuring the fulfillment of obligations. Their interaction with hereditary legal relations is considered. In the plane of interaction of suretyship and inheritance, the author drew attention to the presence of personal elements in this type of provision, revealed what they consist of. According to the contract, the guarantor guarantees to the debtor’s creditor that the debtor will fulfill his obligation. The indication in the norm of the Civil Code of Ukraine that the guarantor vouches for the person of the debtor indicates the existence of the guaranty as a way of securing personal elements. The author proposes to understand this wording in such a way that the guarantor vouches for the fulfillment by the debtor himself, and not by some other person, being sure that the debtor will fulfill this obligation. Such a vision is manifested in the accessory nature of the scope of requirements to the guarantor, since in the event of a change in the obligation without the consent of the guarantor, as a result of which the scope of the debtor’s responsibility has increased, such a guarantor is responsible for the breach of the obligation by the debtor to the extent that existed before such a change in the obligation. A surety is qualitatively and essentially different from a pledge (mortgage), since the pledge is of a material nature and enjoys material protection. Suretyship refers to personal types of guaranteeing the performance of obligations, performed by a specific person, and legal succession to the suretyship is limited precisely taking into account its classification as a personal type of guarantee. This is important for inheritance under the principal obligation. The specificity of suretyship as a form of guaranteeing the fulfillment of an obligation indicates the presence of a significant specific weight of personal elements, which qualitatively distinguishes a suretyship from other types of security, in particular, a pledge. Personal elements accompany suretyship not only in terms of the scope of performance, but also in the area of legal succession, in particular in the event of the surety’s death. The presence of personal and even fiduciary elements in the suretyship limits succession to the obligation secured by the surety in the event of the borrower’s death. [ABSTRACT FROM AUTHOR]

We analyze an important but little‐studied institution for balancing supply risk in the management of procurement operations: performance bonding. By adding the surety as a third party that guarantees contract fulfillment between supplier and buyer, performance bonding aims to streamline the purchasing process by influencing both contractor selection in the bidding phase and contract enforcement during project execution. Using the data on US government procurement from 2005 to 2015 and exploiting an exogenous variation in the threshold for its application to construction contracts, we find that performance bonding improves contract outcomes by 10.5% and 3.7% in terms of delays and extra costs, respectively. Net of bond premia, which by law are included in the award amounts, this effect translates into savings of about 4% in the budget for federal construction projects and 16% for mid‐size projects. We provide suggestive evidence on the effectiveness of selection and monitoring by sureties as driving channels. [ABSTRACT FROM AUTHOR]

With the growth of commercial microfinance in India, the poor have been increasingly enfolded into circuits of global finance. In making these collateral-free loans, however, microfinance institutions (MFIs) engage in new forms of risk management. While loans are made to women with the goal of economic and social empowerment, MFIs require male kin to serve as guarantors. Drawing on fieldwork in the city of Kolkata, I argue that through the requirement of male guarantors, MFIs hedge on kinship, even as they speculate on the bottom of the pyramid as a new market of accumulation. [ABSTRACT FROM AUTHOR]

The article presents court decisions on cases involving fidelity and surety law in the U.S. Topics discussed include summary judgment lawsuit Ingram v. American Contractor Indemnity Co., denial of the surety's motion for summary judgment in Travelers Casualty & Surety Co. v. City of South Pittsburgh, and bad faith and consequential damages in Clark County School District v. Travelers Casualty & Surety Co.

Industry experts and seasoned biotechnology attorneys discussed the future of trial practice, data management in litigation, professional civility in the courtroom, trial practice for associates "in the trenches", and more. This was a tremendous opportunity to learn from leading professionals in the industry for the experienced surety underwriter or claims professional or even someone new to the industry. [Extracted from the article]

The article offers information on several construction surety programs in surety risks management. Topics discussed include the difference between project insurance and project bond, several surety risks associated with bond such as bid bond, payment bond, and performance bond, and the advantages of Subcontractor Default Insurance (SDI) as an alternative bonding program.

The article focuses on the credit enhancement devices used in the international project finance and its role in the civil law system. Topics discussed include role of surety bonds and standby letters of credit in credit enhancement, requirement of the independent guarantees in case of letters of credit and corruption raised in credit enhancement. It further discusses conditions of the financial projects in Peru.

Abstract: Financial guarantees have been extensively used recently as part of rescue packages to bail out troubled institutions and governments around the world. We propose a new incentive compensation model for studying agency conflict between the shareholders and the manager of a typical financial guarantor. In our model, the manager chooses the guarantor''s risk level, with disutility to reduce risk (i.e., reducing the risk of the guarantor incurs a direct cost to the manager). Moral hazard causes the manager to select a level of risk that is higher than the level chosen in an otherwise first-best environment with no conflict of interest between the shareholders and the manager. However, in our proposed framework, charter value plays a self-disciplining role on the manager''s appetite for risk, therefore it helps mitigate the extent of the deviation from first best with agency conflict found previously (e.g., ). This suggests that researchers should study charter value, managerial compensation and risk decisions within a unified framework and not separately, as all studies have done in the past. [Copyright &y& Elsevier]

Surety bonds are instruments used in public and private procurement to avoid the problem of contractor bankruptcy. A surety company issuing such a bond guarantees to either finish the project itself or pay the bond to the procurement agency in case of contractor's bankruptcy. This situation is analysed under the assumption that the bond is either priced fairly, or a risk loading that is proportional to the money at risk is imposed. If the surety is priced fairly, full insurance (or even overinsurance) is optimal. If the surety is priced unfairly, more solvent contractors are more likely to win, thus the problem of abnormally low tenders is alleviated. [ABSTRACT FROM AUTHOR]

The article surveys significant fidelity and surety law decisions and legislation reported from September 1, 2007, through October 31, 2008 in the U.S. In Palm Hills Properties LLC v. Continental Insurance Co., the insured's employee allegedly manipulated the insured's records to reflect that the insured was receiving more rental income than it was actually receiving. In Fair Inc. v. Assurance Co. of America, a nonprofit insured's executive director and treasurer allegedly stole funds from the insured, but the insured failed to provide a sworn proof of loss to its fidelity insurer. In Dooley & Mack Constructors Inc. v. Developers Surety & Indemnity Co., an obligee prime contractor completed the principal's work without notifying the surety or giving it an opportunity to take over.

Conditional performance guarantees with risky collaterals are specific bonding instruments that are not credit extensions or require only a service fee. Instead, they resemble a credit default swap (CDS) that is essentially an insurance contract and can thus be priced accordingly. A CDS-based model is proposed here for pricing these instruments. The model incorporates both contractor default probability and the recovery risk of collateral. It also allows for explicit specification of bonding parameters such as the promised amount of payment in the event of default. For model implementation, a quasi-KMV-Merton approach is proposed for the estimation of contractor default probability. The historical market prices and basic accounting data of publicly traded construction firms in the Taiwan Economic Journal Database (TEJD) are used to test the model. The model demonstrates effective statistical power to distinguish categorized samples of the firms. It shows that the current industrial practice of asking a standard service rate of 1% tends to charge too little for financially distressed firms and too much for normal ones. [ABSTRACT FROM AUTHOR]

This article presents information on fundamental and speculative risks that are being insured by commercial insurance companies. Two examples of financial guaranty insurance are lease insurance and private mortgage insurance. Lease insurance is available from two companies in the U.S.: Mortgage Guaranty Insurance Corporation and United Guaranty Corporation. The companies use identical contracts: the coverage is non-cancellable and premiums are not refundable. Private mortgage insurance is written for the purpose of guarantying a lender payment under a mortgage loan in the event of default by a borrower. An analysis of the operations of financial guaranty insurance, particularly in those areas with a significant volume and history of performance, indicates that commercial insurance of these speculative and fundamental risks is viable only through a skimming of the market; that is, only feasible through a government subsidy of poor risks. Since there is no requirement that an insurer write all exposures in the market and underwriting selection is a key component of all commercial insurance, the inescapable conclusion is that at the upper end of the market both fundamental and speculative risk are commercially insurable.

The article discusses legislation regarding gambling and betting in Madrid, Spain. The Madrid Autonomous Community has authorized remote betting and casino operations. Only companies with authorized establishments in Madrid are allowed to operate Internet gambling systems. Gambling companies must pay guarantees or surety bonds from insurance companies. The author argues the guarantee amounts are excessive. The Madrid Autonomous Community allows gambling marketing in betting shops and areas where gambling events will take place.

Over 240 TIPS leaders and staff met for a very successful and productive Fall Leadership Meeting in Wailea, Maui, Hawaii, at the Grand Wailea from October 16-19, 2019. TIPS CLE: Aviation and Space Law, Fidelity and Surety Law. [Extracted from the article]