Transamerica Premier Insurance Co. v. Brighton School District 27J
In Transamerica Premier Insurance Co. v. Brighton School District 27J, 940 P.2d 348 (Colo. 1997), the Court observed that parties to a surety contract do not remain on equal footing.
"Although the parties to a suretyship agreement are on equal footing in terms of bargaining power when they enter into the agreement, it is the commercial surety who controls the ultimate decision of whether to pay claims made by the obligee under the terms of the surety bond. For this reason, the commercial surety has a distinct advantage over the obligee in its ability to control performance under the secondary agreement. As with insurers, commercial sureties must proceed with the payment of claims made pursuant to a surety bond in good faith. Otherwise, the core purpose of the suretyship agreement, which is to insulate the obligee from the risk of a default, is defeated." Id. at 352.