The bank guarantee is a method which provides obligation fulfillment according to which, the bank giving a guarantee, undertakes on financial liabilities in the face of to which money payment is intended, in economic sphere it calls beneficiary, to pay money in case of failure to carry out by the principal of the obligations in the complete volume provided by a guarantee.
All obligations should be arranged in written form or as the notification. The obligation of bank to the beneficiary doesn’t depend on primary obligation of the person participating in the transaction at own expense if the reference to such obligation is contained in the guarantee text.
Bank guarantee granting is performed in following forms:
1. The security for payment. Consists in the obligation of the bank which has been given out at will of the buyer for benefit of the seller or the supplier, to pay the last necessary sum in the event that the applicant hasn’t executed the obligations by calculation for the given work or service;
2. The tender guarantee. This obligation of bank which it gives out at the desire of that party which has stated the desire to participate in the tender and has suggested the organizer to pay a certain amount for benefit of the organizer of this tender, in that case if:
The participant of the tender refuses the offer which he has given to the organizer of the tender in a definite period, stipulated in the conditions of the tender documentation.
If the contract was not signed in time, stipulated in the tender documentation, at its victory at the auctions.
3. A guarantee of execution of contract commitments. It represents the obligation of the bank which has been given out for example, by order of the seller for benefit of the buyer, to pay to the buyer certain quantity of money funds at non-execution by the seller of the obligations.
4. A guarantee of return of advance payment. It obliges bank to return in advance to the buyer if the seller hasn’t carried out of the obligations on granting of services.
The bank guarantee can cease the action in a case if:
Payments to the beneficiary of means on which the guarantee is given out;
If guarantee period of validity has terminated;
The person, to whom the payment is intended, has refused the rights of a guarantee, having returned it in bank or having notified bank the statement for its exemption from obligations on a guarantee.
Essential conditions of granting of a bank guarantee.
As the bank guarantee is the unilateral transaction before giving out a guarantee, the bank is obliged to conclude the agreement with the client about granting to it this guarantee in which the order of issue of a guarantee, its conditions, repayment terms and responsibility between Bank and the Applicant makes a reservation. The same provision, as well as to the credit agreement is necessary for such agreement. All data should be specified with high definition. In point on the sum it is necessary to specify the sum, instead of an order of its determination.
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