What is a Customs Bond?
A Customs Bond is a contract which is given to insure the performance of an obligation imposed by a law or regulation.
Who are the parties?
Unless assets are pledged in lieu of surety, usually there are three parties to a Customs bond: principal, surety, and the beneficiary, U.S. Customs Service. The principal on a Customs bond gives the bond the U.S. Customs Service to insure the satisfactory performance of the principal’s obligation. The U.S. Customs Service is the beneficiary of a Customs bond. The surety on a Customs bond agrees to pay a specified sum of money to the U.S. Customs Service if the principal fails to perform the required obligation satisfactorily.
The specified sum of money which is set forth in the bond constitutes the damages suffered by the U.S. Customs Service as a result of the principal’s failure to perform the required obligation. That sum, because the amount is set, is known as liquidated damages. The U.S. Customs Service has the authority to require bonds under Title 19, United States Code, section 1623, and most Customs bonds are taken under that authority. In addition, there are a few statutes that specifically require the U.S. Customs Service to get a bond from a person who wants to engage in certain transactions.