Q. With reference to ‘Surety Bond’ consider the following statements::
1.It is a written agreement to guarantee compliance, payment, or performance of an act. 
2.It is a type of two-party agreement.
3.It is mainly aimed at infrastructure development to reduce indirect costs for suppliers and work contractors.
Which of the statements given above are correct?

[A] 1 and 2 only

[B] 2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: C
Notes:

Explanation –

Statement 1 and 3 are correct. Surety Bond is a written agreement to guarantee compliance, payment, or performance of an act. It is mainly aimed at infrastructure development to reduce indirect costs for suppliers and work contractors.

Statement 2 is incorrect. Surety is a unique type of insurance because it involves a three-party agreement. The three parties in a surety agreement are: Principal, Surety and Obligee.

Source: ForumIAS