Bank guarantee

What is a bank guarantee?

The guarantee is a one-sided contract in which the guarantor undertakes to take responsibility for a certain future success or behavior and / or to bear the risk of future damage. The bank guarantee is a promise of performance in which a credit institution assumes liability for a certain success to occur.

It can be used in domestic and foreign trade:

In domestic trade it is called Guarantee credit granted, in particular as bid, advance, performance and warranty guarantees. The provision of a guarantee credit creates a contingent liability for the bank, which only becomes a liability if the borrower fails to provide his services to the third party.

The following bank guarantees exist in foreign trade:

The bid bond, in which the guarantor undertakes to pay damages up to a certain amount if a participant in a public tender who was awarded the contract does not comply with the tender conditions.

Deposit guarantee

The advance payment guarantee, in which the guarantor assures the importer that the advance payments made will be repaid if the exporter does not deliver in accordance with the contract.

The payment guarantee, which is given in favor of the exporter on behalf of the importer and which is intended to guarantee the remaining payment of the purchase price if the importer does not pay.

Delivery and performance guarantee

The delivery and performance guarantee, in which the bank guarantees the contractual fulfillment and on-time delivery of the goods. In the event of non-fulfillment, it pays damages. Special forms are here z. B. the warranty or bill of lading guarantee.