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Question
What are major differences between sureties and security?
Answer During construction contracts, if a contractor fails to carry out works, employer would experience from severe financial loss and then some forms of protection have to be established in contract.
For indemnity bond, contractor obtains a guarantee from a third party such as a bank or an insurance company that in return for a fee, agrees to start financial responsibility for performance of contractor's obligations. This third party will pay to employer in case there is a contractor's default.
For security, a sum of wealth is deposited in employer's account and upon reasonable fulfilment of contractor's obligations; sum will be repaid to contractor.
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