If an importer (principal) fails to perform its obligations under the bond, CBP may assess a claim against the principal and surety under the terms and conditions of that bond. The claim may be for breach of an obligation to pay duties. In that case, CBP may make a claim for unpaid duties under the bond. If the principal breaches a different condition of the bond, CBP may issue as claim for liquidated damages. The amount of liquidated damages is established by the conditions of the bond. In no case can a claim for liquidated damages exceed the amount of the bond that appears on the CBP Form 301.

If the bond principal cannot or will not perform its obligations, CBP can make demand for payment on both the principal and the surety. Both the bond principal and surety are “jointly and severally” liable for any claims made under the bond, including claims for liquidated damages. That means CBP will accept payment from either party in satisfaction of the claim. If the surety pays CBP, it can make a legal claim for payment against the bond principal, but CBP is not a party to that action. The importer can be placed on CBP Sanctions List which does not allow further entry approvals.