Final answer:
The bond that protects a contractor from dishonest employees is called a Surety Bond. The correct option is 1.
Step-by-step explanation:
A bond to protect a contractor from dishonest employees is known as a Surety Bond. Surety Bonds function as a three-party agreement, where the surety company assures the project owner (obligee) that the contractor (principal) will perform a task or compensate for the obligee’s loss up to the bond amount.
This is particularly relevant when there's a risk of financial loss due to the dishonesty of the contractor's employees. Essentially, the Surety Bond serves as a guarantee, reassuring clients and stakeholders that the contractor is committed to ethical business practices. It provides financial security, covering losses incurred due to employee malfeasance.
By securing this bond, contractors demonstrate their responsibility and commitment to integrity, instilling confidence in clients and reinforcing accountability within the construction business framework.
The correct option is 1.