Which bond guarantees performance in conformity with the law?

• A. Conservation Bond
• B. Blue Sky Bond
• C. License Bond
• D. Franchise Bond

Answer: (C)

A license bond guarantees that the licensee will operate in compliance with applicable laws and licensing requirements. When a government agency issues a license, it may require this bond to protect the public and ensure accountability. If the licensee violates laws or fails to meet regulatory obligations, the bond can be used to cover penalties, damages, or costs up to the bond amount. This makes the bond a concrete promise of lawful conduct behind the licensed activity.

The other types differ in purpose: a conservation bond relates to environmental or conservation obligations, a blue sky bond ties to securities laws and investor protection, and a franchise bond ensures the terms of a franchise agreement are followed—neither is specifically about guaranteeing conformity with general legal requirements for licensed activities.