Bond, in Law, is an instrument on stamped paper, by which the party granting it becomes bound to pay a sum of money, or perform any act or duty, according to the terms of agreement.
In England and the United States, a bond is said to be an instrument under seal, whereby one person becomes bound to another for the payment of a sum of money, or for the performance of any other act or thing. The person who is thus bound is called the obligor, and he to whom the bond is given, the obligee; and this obligation may be either by or to one or several persons. The bond may be unconditional simply for the payment of money, or it may be accompanied with a condition, the performance of which is secured by a penalty; but in any event, the debt created by a bond is a Specialty Debt, which, however, has now no preference over simple debts, the only distinction being that a specialty debt takes twenty instead of six years to prescribe. In the United States, where the law is based on that of England, the period of prescription varies from six years for simple contracts, to ten, fifteen, or twenty years for bonds in some of the states.
The requisites of a good bond are as follows: (1) The bond must have an obligor and obligee. In regard to such parties, it is to be observed that in general no person who is under any legal disability to contract can become an obligor, though it is otherwise with an obligee. An infant cannot bind himself unless the bond be for necessaries; but a bond may be given to an infant, a lunatic, or an alien. (2) The next requisite of a bond is, that it must state the precise sum in which the obligor is bound; any omission in this respect will invalidate the instrument. If, however, the sum be merely erroneously stated, the courts will make the necessary correction, and construe the bond so as to give effect to the intention of the parties. The penalty stipulated on failure to pay is always now reduced to the debt and expenses. (3) A bond must be so expressed as to create a clear legal obligation. But for this purpose no particular form of words is necessary; any mode of expression by which the intention appears will suffice. A bond, again, may be in the first or third person, only in order to obtain legal facilities it must be expressed in the English language, and not in Latin or French. (4) The bond must be duly executed. Such execution, in general, is the same as that of deeds, the sealing being the essential solemnity; and although it is usual for the obligor to sign the bond, his signature is not necessary to its validity. Then the bond must be delivered, but it need not be dated; a bond has even been held good, though it bear a false or impossible date, on the principle that deeds take effect from, and have relation to, the time of their delivery, and not in reference to their date. Such, in general, is the form and structure of an English or United States bond, and it is used in an infinite variety of contracts. A bond absolute for the payment of money differs from a promissory note only by being under seal.
In Scotland, the bond—personal bond, as it is called—differs in several points of form from the English instrument. Its general structure is different, and it is executed in a different manner, with much solemnity and particularity, but without sealing; it does not bear to be for double the sum due, or any sum other than the correct one, which it states with precision, with a penalty, which is usually one-fifth of the principal sum; and it must have a true date, and be very specific in all its details. As in English practice, there are in Scotland two kinds of these instruments: first, bonds for money simply; and secondly, bonds for the performance and accomplishment of some act, or, as they are called in the Scots practice, bonds ad facta præstanda. The Scottish bond takes forty years to prescribe. It is always registered in order that summary diligence may pass upon it. Bonds taken payable to heirs, excluding executors, do not belong to the movable estate of the creditor.
A mortgage over land or other real estate is also in Scotland in the form of a bond, by which name, indeed, the mortgage is technically described. Thus, there is the heritable bond, and the bond and disposition in security, the latter being the more modern form. By these mortgage bonds, the borrower not only becomes personally bound in the repayment of the loan, but 'in further security and more sure payment' he also conveys to the lender the land, or other real property, itself, on which the sum is to be made a charge, with, in a certain event and under certain conditions, a power of sale, by means of which the creditor, on the debtor's default, may recover his money. The transmission and execution of these securities are regulated chiefly by the Titles to Land (Scotland) Act, 1868. There are, in England, bonds by which expectant heirs may operate on their reversions, and these are called Post-obit bonds (q.v.). The English law as to sales of reversionary interests was declared by statute in 1868. See REVERSIONARY INTEREST. The name bond is also applied to many securities or general charges on which limited companies are in the habit of raising money, whether strictly in the form of an ordinary bond or not; thus also Peruvian bonds or Egyptian bonds are spoken of. The legislature of the United States authorises municipal corporations to issue bonds in aid of works of internal improvement. See DEBENTURE, LLOYD'S BONDS.
According to the law of both countries and the United States, certain bonds are void; such as a bond conditioned either to do something which the law considers wrong in itself, or which is legally prohibited, or to omit doing something which is a duty, or to encourage the performance of anything which is in the nature of a crime or offence against the law. In like manner, bonds to procure marriage, called marriage brocade bonds, or to restrain marriage, or for immoral considerations, or in restraint of trade, are void. A bond, however, may be valid in part, or void in part, if such parts are separable. Joint and several bonds are the bonds of two or more obligors who bind themselves severally and jointly: if one pays the entire debt he is entitled to contribution from the other obligors. In some states of the American Union a married woman's bond is good. See BROCADE BONDS, MORTGAGE, SPECIALTY DEBT.
BLANK BONDS were Scots securities, in which the creditor's name was left blank, and which passed by mere delivery, the bearer or holder being at liberty to insert his name in the blank space, and sue for payment. The intention originally was to facilitate the transmission of the obligation; but experience having proved that they were used for fraudulent purposes, these bonds were, by a Scottish act passed in 1696, declared void. The act, however, excepts from its provisions the notes of trading companies, and indorsements of bills of exchange. It is a difficult question how far certain debentures of modern joint-stock companies are negotiable, and if so, whether they are objectionable under this statute.
BOND OF CORROBORATION is an additional obligation by the debtor in a bond to accumulate arrears of interest, or granted to the heir of the creditor to save the expense of title. It used to be granted by the heir of the debtor, but since 1874 this has been rendered unnecessary by statute.
BOND OF CAUTION is the obligation given by guarantors for the faithful discharge of duty by judicial factors and such officers; and also for the damages and expenses which may be incurred by interdicts or sists of diligence (see CAUTION).
BOND CREDITOR, in England, is the name sometimes given to a creditor whose debt is secured by a bond.