What is the purpose of a supply bond?

A supply bond is a type of surety bond specifically designed to ensure that a contractor or supplier will deliver goods or materials according to the terms of a contract. This bond serves as a financial guarantee that the supplier will fulfill their contractual obligations, including the timely delivery of goods at the agreed-upon price. If the supplier fails to meet these obligations, the bond can provide compensation to the party that suffered losses, thereby protecting their financial interests.

The other options do not align with the primary function of a supply bond. Protecting against fraud in securities sales relates to securities regulations, while guaranteeing payment for lost instruments typically pertains to different types of financial instruments or bonds. Handling probate matters has no relevance to supply bonds, as it deals with the legal process of managing a deceased person's estate. Thus, the focus of a supply bond is specifically on the delivery of goods in a contractual relationship.