Performance Bonds Performance bonds provide financial guarantees that contracts and other business deals will be completed according to mutual terms. When a principal breaks a bond’s terms, the harmed party can make a claim on the bond to recover losses. Each performance bond that’s issued operates among the “obligee”, the “principal”, and the “surety”. • The obligee (the entity for whom the work is being performed) requires the principal (the entity performing the work) to purchase a bond to avoid potential financial loss to the obligee. • The principal purchases the bond to guarantee the performance and quality of work to be done. • The surety issues the bond and financially guarantees the principal’s capacity to perform a specific task. Before contacting a surety provider, professionals should check all federal, state and local regulations regarding performance bonds in their respective industries. Regulations regarding a specific performance bond in one state will vary from those that apply to a performance bond in another. Businesses that contract to provide goods or services to the state or other public agencies within the state generally have performance bonds. These bonding requirements are established by statute. Note that some public and private contracts can require the “fidelity bonding” of individual employees of the principal to protect against loss caused by employee dishonesty. Bonds are obtained through insurance agents or through a bonding company. The cost of a bond is a portion of the face amount of the bond and will depend in part on the risk to the bonding company in covering the potential loss. See the information regarding the Minnesota Federal Bonding Service in the Sources of Information, State Programs section of this Guide.
ENVIRONMENTAL PROTECTION PROGRAMS
The Legislature has declared in statute that each person in Minnesota has a right to the protection, preservation and enhancement of air, water, land and other natural resources, and that each person also has the responsibility to contribute to the protection, preservation and enhancement of those resources. To secure and advance that right a number of state agencies have responsibility and authority for policy development, standard setting, permitting and enforcement in environmental areas. These agencies include the Minnesota Environmental Quality Board (EQB), the Minnesota Pollution Control Agency (MPCA), the Minnesota Department of Natural Resources (DNR), the Minnesota Department of Agriculture (MDA), the Minnesota Department of Health (MDH), and others. The Directory of Licenses and Permits at the back of this Guide lists the appropriate regulatory agency by regulated activity.
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