Surety is a legal arrangement where one party, known as the surety, agrees to take responsibility for the debt or obligation of another party if that party fails to fulfill their commitments. This is commonly used in situations like loans or contracts, providing a safety net for lenders or service providers. In the context of finance, surety bonds are often required in construction projects, ensuring that contractors complete their work as promised. If the contractor defaults, the surety company compensates the project owner, protecting their investment and ensuring project completion.