A Nevada contractor's bond is in the amount of $50,000. The contractor defaults on three separate projects with damages of $25,000, $18,000, and $12,000 respectively. What is the maximum total amount that can be recovered from the bond?
Correct Answer
B) $50,000
The bond amount of $50,000 is the maximum that can be recovered regardless of the total claims amount ($55,000).
Why This Is the Correct Answer
A surety bond is a fixed pool of funds. The bond amount — $50,000 — is the absolute ceiling for all combined claims. Total damages of $55,000 exceed the bond, so claimants can collectively recover no more than $50,000, prorated if necessary.
Why the Other Options Are Wrong
Option A: $65,000
$65,000 exceeds both the bond amount and the total damages, making it impossible to recover from the bond. This figure has no basis in the scenario.
Option C: $55,000
$55,000 is the sum of all three claims ($25,000 + $18,000 + $12,000) but it exceeds the bond amount. The bond caps recovery at $50,000 regardless of actual damages.
Option D: $43,000
$43,000 represents only two of the three claims ($25,000 + $18,000), which is an incomplete and arbitrary calculation with no legal basis.
Memory Technique
A bond is like a bucket — once it's empty, it's empty. No matter how many claims pour in, you can only take out what's in the bucket ($50,000).
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