Bond

BOND, in English law, an obligation by deed. Its design is to secure that the obligor, i.e., the person binding himself by the bond, will either pay a sum of money, or do or refrain from doing some act ; and for this purpose the obligor binds himself in a penalty to the obligee, with a condition added that, if the obligor pays the sum secured (which is usually half the penalty) or does or refrains from doing the specified act, the bond shall be void: otherwise it shall remain in full force. This condition is known as the defeasance because it defeats or undoes the bond.

If the condition is not performed,

i.e., if the obligor does not pay the money by the day stipulated, or do or refrain from doing the act provided for, the bond becomes forfeit or absolute at law, and charges the obligor and his estate (see Conveyancing Act 1881, s. 59) . In old days, when a bond was forfeit, the whole penalty was recoverable at law and payment post diem could not be pleaded to an action on it, but the court of chancery early interposed to prevent oppression. It held the penalty of a bond to be the form, not the substance of it, a pledge merely to secure repayment of the sum bona fide advanced, and would not permit a man to take more than in conscience he ought, i.e., in case of a common money bond, his principal, interest and expenses. This equitable relief received statutory recognition by an act of 1705 which provided that, in case of a common money bond, payment of the lesser sum with interest and costs shall be taken in full satisfaction of the bond. In cases of special conditions, the court of equity will relieve from a penalty, but if the sum agreed to be paid on default is held to be real damages, it will not interfere. The leading case is Kemble v. Farren (1829) 6 Bingham 148.

Bonds were and still are given to secure performance of a variety of matters other than the payment of a sum of money at a fixed date. They may be given and are given, for instance, to guarantee the fidelity of a clerk, of a rent collector, or of a person in an office of public trust, or to secure that an intended husband will settle a sum on his wife in the event of her surviving him, or that a building contract shall be carried out, or that a rival business shall not be carried on by the obligor except within certain limits of time and space. The same object can often be more conveniently attained by a covenant and covenants have largely superseded bonds, but there are cases where security by bond is still preferable to security by covenant.

Bonds given to secure the doing of anything which is contrary to the policy of the law are void. It was not without design that Shakespeare laid the scene of Shylock's suit on Antonio's bond in a Venetian court; the bond would have had short shrift in an English court.

Post Obit Bonds.—A post obit bond is one given by an expectant heir or legatee, payable on or after the death of the person from whom the obligor has expectations. Such a bond, if the obligee has exacted unconscionable terms, may be set aside.

Bottomry Bonds.—A bottomry bond is a contract of hypoth ecation by which the owner of a ship, or the master as his agent, borrows money for the use of the ship to meet some emergency, e.g., necessary repairs, and pledges the ship (or keel or bottom of the ship, partem pro toto) as security for repayment. If the ship safely accomplishes her voyage, the obligee gets his money back with the agreed interest; if the ship is totally lost, he loses it altogether. A Respondentia Bond is one in which the cargo alone is charged.

Lloyd's Bonds.—Lloyd's bonds are instruments under the seal of a railway company, admitting the indebtedness of the company to the obligee to a specified amount for work done or goods sup plied, with a covenant to pay him such amount with interest on a future day. They are a device by which railway companies were enabled to increase their indebtedness without technically violat ing their charter. The name is derived from the counsel who settled the form of the bond.

Debenture Bonds.—Debenture bonds are bonds secured only by the covenant of the company without any floating or fixed charge on the assets. (See COMPANY LAW : Mortgage.) Recognizance.—A recognizance differs from a bond in being entered into before a court of record and thereby becoming an obligation of record.

Heritable Bond is a Scots law term, meaning a bond for money, joined with a conveyance of land, and held by a creditor as security for his debt.

For goods "in bond"

see BONDED WAREHOUSE.