Final answer:
In surety bonding, the third party to whom the surety is answerable is the Obligee. This is the entity requiring the bond and is protected by it, in case the principal fails to fulfill their obligations.
Step-by-step explanation:
In the context of surety bonding, the third party to whom the surety is answerable is the Obligee. Surety bonds involve three main parties: the Principal, the Surety (which is the company providing the bond), and the Obligee (which is the entity requiring the bond). The Principal is the party that undertakes the obligation and needs to purchase the bond, the Surety guarantees that the Principal will fulfill their contractual obligations, and the Obligee is the party protected by the bond, usually the one requesting the bond.
In this scenario, the correct answer to the student's question is option 2) Obligee. If the Principal fails to meet the obligations, the Surety will step in to compensate the Obligee. After that, the Surety may seek reimbursement from the Principal or the Indemnitor (the party that indemnifies the surety against loss).