What is the face amount of the bond in surety?

The face amount of the bond in surety, commonly referred to as the penal sum, refers to the amount specified in the bond that the surety company is liable for in case of default by the principal. This value is a critical component of a surety bond as it establishes the maximum financial obligation that the surety company agrees to underwrite.

In the context of surety bonds, the penal sum is essentially the guarantee amount that protects the obligee (the party requiring the bond) by ensuring that funds are available to cover any potential losses arising from the principal's failure to fulfill their obligations. By defining this amount clearly in the bond, all parties—obligee, principal, and surety—understand the limits of liability and coverage offered.

Other terms related to bonds, such as bond amount, penalty, and surety amount, may refer to various aspects of the bond, but they do not specifically capture the concept of the penal sum as the definitive and contractual obligation amount that dictates the surety's maximum liability.