A Conduct Bond is a surety bond required by the Texas Alcoholic Beverage Commission (TABC). This surety bond is required of retailers that do not hold a food and beverage certificate but serve alcoholic beverages on the premises. A Conduct bond may be required of a retailer whose gross receipts come primarily from the sale of alcoholic beverages.
Conduct Surety Bond Requirement:
Required by all retailers who do not hold a Food and Beverage Certificate. The amount of the bond is determined by the distance to a public school. If the location is over 1,000 feet from a public school, the conduct bond amount will be $5,000. If the location is less than 1,000 feet from a public school, the bond amount will be $10,000. The Conduct Bond can be submitted in a Form of a surety bond, letter of credit or assignment of a CD.
Performance Surety Bond:
Applies to Bexar, Dallas, Harris and Tarrant Counties only. Required by holders of a Beer Retailer’s On Premise License or a Wine and Beer Retailer’s Permit who does not hold a Food and Beverage Certificate. Initial Bond amount is $2,000 and will increase due to a violation of the TABC Code.
What does a Conduct Surety Bond do?
The Conduct Bond is required to maintain the license or permit needed to continue to operate the retail location. The bond provides a form of guarantee that the retailer will abide by the TABC code, rules and state laws regarding alcoholic beverages. In the instance where a retailer violates these TABC laws, the state can place a claim on the bond. The Surety, the company providing the guarantee behind the surety bond would be responsible for a payment to the state up to the amount of the bond. If a claim was filed on the bond, the Surety would pay the state then attempt to collect from the retailer the amount paid on the claim. The retailer is still ultimately financially responsible for any amount paid out on a claim by the Surety.