ABSTRACT
Security for payments and performance is always an issue in major contracts, especially when they contain an export/import element. This chapter sets out the basic principles behind the types of security normally used. Virtually all forms of security are contract-based, but they fall into two categories; the use of assets as security and the use of third parties as security. People and companies may act as security either by acting as a surety, or by providing a bond of some kind. A surety, is simply a person who undertakes secondary responsibility for the obligations of another person. Legally a bond is simply an undertaking that is binding upon the person giving that undertaking because it is done as a deed or under seal. Bonds are usually used as a security, either security for the performance of obligations under or in respect of the contract, or for the payment or repayment of sums paid or payable under the contract.
