Advance Payment Guarantee A contractor who is awarded a contract may ask for advance payment in order to start the project. The project sponsor will, for this purpose, require an Advance Payment guarantee to the effect that the contractor will perform his contract and if he fails, he will refund to the project sponsor the… Read More »
Performance Guarantee or Performance Bond Article 2 of ICC publications 325 defines “Performance Guarantee” as an undertaking given by bank (guarantor) at the request of a supplier of goods or services or other contractor (principal) to a buyer or to an employer (the beneficiary) whereby the guarantor undertakes, in the event of default by the… Read More »
Shipping Guarantee The need for such a guarantee arises when the goods have arrived destination before document of the title to goods i.e. Bill of Landing, Air waybill etc. Therefor in order to take delivery of the goods, the importer approaches his bank to issue a bank guarantee in favor of the carrier of goods… Read More »
Role of Guarantees/bonds in international trade A bank guarantee is an irrevocable obligation of a bank to pay a sum of money to the beneficiary in the event of non-performance of a contract by its customer, the principal. Like letters of credit, performance bonds and advance repayment guarantees are being increasingly used in international trade… Read More »