License and permit bonds are required by state, municipal or federal ordinance or regulation as a prerequisite to receiving a license for engaging in a particular business or exercising a particular privilege.  The bond functions as a guarantee from a Surety to a government and its constituents that a company will comply with an underlying statute, state law, municipal ordinance, or regulation. 

Contractors License bonds, which assure that a contractor, (such as a plumber. electrician, or general contractor) complies with local laws relating to his field.