Surety

The Italian Supreme Court has defined so-called "surety bonds" as contracts that fulfill the same legal and economic function of a security in cash or other real assets that a particular person is required to establish in the favor of the Public Administration or private party, in order to ensure the fulfillment of a possible future financial obligation as compensation for damages or penalty.

An obligation may arise against the contractor if they substantially violates certain forthcoming primary obligations or mainly does or does not carry out certain duties arising from

• contracts with private or public authorities for the execution of works or services
• the law directly, in relation to the Public Administration (VAT prepayment, re-export of goods or products in a temporary import status, transfer of goods or of goods from customs to customs, re-entry of vehicles from abroad, etc.)

Surety bonds are becoming more often in contracts between private parties as an instrument for protecting a company's assets.