Bank guarantee - the Bank's obligation to make payment to the recipient on a certain amount of assurance on presentation of a claim for payment under the terms of the guarantee (eg, in case of failure of his partner to its contractual obligations). A bank guarantee is a way to ensure the contractual obligations, but it is by nature independent of these obligations. This means that the Bank does not undertake any obligation to fulfill the terms of the contract, but guarantees to pay a specified amount in the guarantee to the recipient under the warranty. Unlike credit bank guarantee is not a form of payment, and is used only in the event that the principal has not fulfilled its obligations to the beneficiary.
Types of guarantees
There are several types of bank guarantees - payment, contract, tender, customs. For example, a payment guarantee is an obligation of the bank to cash payment upon presentation of the beneficiary demand for payment and other documents specified in the guarantee (unpaid bills, claims, judgments and so on). In turn, the tender guarantee or warranty for the bidding is to prevent the case where the bidder winning the auction, refuses to sign the contract. In particular, without a bank guarantee company probably will not be allowed to participate in international tenders.
The main purpose of refund guarantee is to ensure proper use of advances paid in accordance with the terms of the contract. Such advance payment guarantee shall be returned if the supplier or contractor fails to fulfill the obligations assumed. Finally, the performance bond protects the buyer from the improper performance of the contract - non-delivery of goods, failure to work or refusal of services in accordance with the terms of the contract on time.
Types of guarantees
There are several types of bank guarantees - payment, contract, tender, customs. For example, a payment guarantee is an obligation of the bank to cash payment upon presentation of the beneficiary demand for payment and other documents specified in the guarantee (unpaid bills, claims, judgments and so on). In turn, the tender guarantee or warranty for the bidding is to prevent the case where the bidder winning the auction, refuses to sign the contract. In particular, without a bank guarantee company probably will not be allowed to participate in international tenders.
The main purpose of refund guarantee is to ensure proper use of advances paid in accordance with the terms of the contract. Such advance payment guarantee shall be returned if the supplier or contractor fails to fulfill the obligations assumed. Finally, the performance bond protects the buyer from the improper performance of the contract - non-delivery of goods, failure to work or refusal of services in accordance with the terms of the contract on time.
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