In the state of Illinois, a type of surety bond called an Injunction Bond may be required before the court issues a restraining order or a “preliminary injunction” against a party. In other words, when a plaintiff, the filer of the injunction, wishes to prevent the defendant, the one being filed against, from an act. This is only needed for preliminary injunctions. In some cases, the court will issue a preliminary injunction while they are considering the case. If a permanent injunction or restraining order is issued by the court, an Injunction Bond is no longer required.
Why is it needed?
In cases where an injunction or restraining order is requested against a defendant, the court will require an Injunction Bond to be issued by a surety bond provider to ensure that the defendant will be paid legal fees, damages, and other losses if the injunction is found to be unwarranted.
One of the most common uses of an Injunction Bond is when one party is filing a lawsuit in a “Non-Compete Agreement” case. An example of this would be if a graphic designer was a contractor with a marketing firm and had signed a Non-Compete Agreement where they agreed they would not solicit the marketing firm’s clients. The graphic designer then decides to move into marketing and convinces the original marketing firm’s largest client to move their business to the graphic designer’s new venture. The original marketing firm would be the party filing the lawsuit for breach of the Non-Compete Agreement. The defendant, in this case the graphic designer, may be asked to cease working with the client until the matter is resolved. The Injunction Bond would cover the loss of revenue to the defendant while the case was being litigated, legal fees and possibly damages to reputation. If the defendant wins the case, they are entitled to recoup all of those losses. The Injunction Bond ensures those losses will be paid.
Another example would be if two people claim ownership of a property and one person tries to sell it, the other may request an injunction against the party attempting the sale. The court will issue a temporary injunction against the sale while investigating the ownership of the property in question. The plaintiff would be required to get an Injunction Bond that would cover the legal fees and damages incurred by the defendant. If the plaintiff is found to not have rights to the property in question, the defendant would be awarded the cost of their fees and damages covered by the Injunction Bond. The surety bond company would pay out the bond and the plaintiff would be responsible paying the surety bond company.
According to the Illinois Code of Civil Procedure:
“Sec. 11-103. Bond. The court in its discretion, may before entering a restraining order or a preliminary injunction, require the applicant to give bond in such sum, upon such condition and with such security as may be deemed proper by the court, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained.
No such bond shall be required of any governmental office or agency.
A surety upon a bond or undertaking under Article XI of this Act submits to the jurisdiction of the court and irrevocably appoints the clerk of the court as the surety’s agent upon whom any papers affecting the surety’s liability on the bond or undertaking may be served. Such liability may be enforced on motion without the necessity of an independent action. The motion and such notice of motion as the court prescribes may be served on the clerk of the court who shall forthwith mail copies to the persons giving the security if their addresses are known.”
Bond requirements and amounts are placed at the discretion of the court. They vary by case. Due to the nature of injunction cases, bonds usually need to be acquired quickly.
Disclaimer: This information is intended to help individuals understand surety bonds, but it should not be construed as legal advice. As with any public policy, there are a number of issues that the law and rules do not address, and law is always subject to change and interpretation. Madden & Bergstrom cannot offer legal advice or offer advisory opinions.