Types of Bank Guarantee
Exporters seeking to win overseas contracts that are put out to tender may have to provide Bid Guarantees and/or Performance Guarantees as part of the tendering process. In other circumstances Exporters may have to provide Advance Payment Guarantees to secure an Importer who has prepaid part of a sales contract.
Usually these Guarantees are payable on demand and will relate to the circumstances for which the Guarantee was originally issued.
Bid Guarantees will be used to reimburse the Importer in cases where the Exporter’s bid is accepted but the Exporter then fails to sign the contract.
Performance Guarantees will reimburse the Importer if the Exporter fails to fulfill their obligations under the contract.
An Advance Payment Guarantee will reimburse the Importer for any advance made to the Exporter when the Exporter has failed to fulfill the contract.