For markets to operate satisfactorily, buyers and clients must have confidence that goods or services ordered will, in fact, be delivered and will work. The basis of that confidence is an aggregate of factors such as a seller's and contractor's reputation, retention monies, personal directors' guarantees and the possibility of suing for breach of contract. In the event that a particular buyer does not have enough confidence that a particular seller will deliver with respect to a particular transaction, a bond may be sought to top-up that buyer's level of confidence to a satisfactory point.
There are many ways in which confidence can be increased. Surety bonds are one such way, but these instruments have not been widely used in Australia in recent times.