Duhaime's Law Dictionary


Bond Definition:

A written guarantee in regards to the fulfillment of a legal obligation.

Related Terms: Surety Bond, Performance Bond, Surety, Stock, Security, Share

A written promise of one person to do something or to pay a sum of money to a specified person, on either a certain date or upon the occurrence, or barring the occurrence, of a specified event.

The purpose of a bond is to provide assurances that the bonded person will properly do what is is that they have agreed to do such as administer an estate or administer a person’s financial affairs. If the estate is mismanaged, others can look to the bond (and the sureties, if any) to compensate the person whose interests have been compromised.

In Grimmer:

"... a bond ... [is] a written instrument under seal whereby the person executing it makes a promise or incurs a personal liability to another."

In a 1922 court decision out of Manitoba, Burnett v Karanko, a bond was defined as:

"A bond, however, is a very common form of obligation.

"It consists of a definite promise in writing under seal on the part of some person, who is called the obligor, to pay some other person, who is called the obligee,  a definite sum of money, subject, however, to conditions which might void the obligation.

"There can be no bond without an obligee."

bondMore recently, in 1999 (Paul D'Aoust Construction), the Ontario Court of Appeal adopted these words to describe a bond:

"A bond is simply a deed (a deed being a document in writing on paper which is signed, sealed, and delivered ...) whereby one person undertakes to pay a specified sum of money to another, either immediately or at a future date."

In the City of Windsor, the Court reflected:

"What magic is there in a bond — bonds were invented so that ordinary fellows would not have to put up large sums of money."

An example of a bond is a form required by the court rules in British Columbia in regards to the administration of an estate, form 73 as of 2008, in an amount double the value of the estate. The form is in the following words:

"ADMINISTRATION BOND. We, AB, of Fort Nelson, British Columbia; lawyer and CD, social worker of Courtenay, British Columbia, are jointly and severally bound unto the Registrar of the Supreme Court of British Columbia at Vancouver in the sum of $1,000,000 to be paid to the registrar, for which payment we bind ourselves and each of us, for the whole, our heirs, executors, and administrators.

"The condition of this obligation is that if the above named AB and CD, the intended administrator of all the estate which by law devolves to and vests in the personal representative of the deceased, EF, when lawfully required, (a) makes a true and perfect inventory of the estate which has or shall come into his or her possession, control, or knowledge, or into the possession or control of any other person for him or her, (b) exhibits the inventory to the Supreme Court of British Columbia, (c) well and truly collects and administers the estate according to law, (d) makes a true account of his or her administration, and (e) lodges the grant of administration in the court, then this obligation will be void and of no effect, but otherwise will remain in full force."

In another estate case, Macht v BC, Justice Taylor of the Court of Appeal suggested these criteria for determining whether a bond was opportune:

"The purpose of (a) bond cannot be to guard against apprehended misfeasance or incompetence--indeed, it is unlikely that anyone suspected of a tendency to either would be able to obtain a bond.

"The function of the bond is to guard against that which is unforeseeable and unsuspected.

"In deciding whether the risk of intentional or unintentional loss is so small, in relation to the effect of imposing the cost of a bond on the estate, as to justify appointment of a committee without requiring security, the questions asked may be such as these:

• (i) Does the applicant seek limited or unlimited powers to deal with the patient's assets?

• (ii) Has the applicant been chosen by the patient as executor or donee of a power of attorney, or nominated by the patient under the Act as committee; does the applicant have a joint bank account with the patient; is the applicant otherwise shown to be a person in whom the patient has placed trust?

• (iii) Is the applicant a spouse who has in the past handled the patient's income, or for whose support the patient's assets are to provide? But are there also former spouses, or children of former spouses, for whom the patient's estate may also have to provide?

• (iv) Has the applicant satisfied the court of his or her experience in handling investments for others, or general competence and reliability in financial matters?

• (v) Has the applicant produced independent evidence of his or her involvement in rendering assistance to the patient during the patient's illness--such as affidavits from those in charge of the patient's medical or nursing care?"

Bonds frequently involve a third party, as in a surety bond, three-party agreement where the obligor or third party (usually an insurance or specialized surety bond company) guarantees to the obligee the performance of another party's obligation). See surety and surety bond for more information.

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