State X hired Build-Right Construction to build a bridge.State X required that construction be completed within 2 years after the contract was signed.Les Johnson is the president of Build-Right.State X required that Build-Right's promise to perform be guaranteed by a third party.Build-Right purchased a performance bond from Rock Solid Indemnity.The bond requires Rock Solid to be responsible if Build-Right does not have the project completed on time.In this scenario,which party is the principal?

Question

Quizplus · Accepted Answer

Build-Right Construction is the principal in this scenario because they are the party responsible for fulfilling the obligation of building the bridge within the allotted time frame. The performance bond purchased from Rock Solid Indemnity is a form of insurance to guarantee Build-Right's promise to perform. State X is the obligee, or the party that is owed the obligation of the completed bridge. Les Johnson is the president of Build-Right, but he is not a party in this contract. Rock Solid Indemnity is the surety or the third party that provided the performance bond.

State X Hired Build-Right Construction to Build a Bridge