Guarantee

Bank guarantee - the bank obligation before the beneficiary to make payment in its advantage within the specified amount in case when the counterpart of the beneficiary does not fulfill its obligations before the beneficiary - guarantee event and is a mean of ensuring the fulfillment of financial and other contractual obligations and as well as the letter of credit, is own obligation of the bank granted to the counterpart on account and by order of its client.

One of advantages of this tool is that the guarantee can serve the foreign trade transactions for the sum several times exceeding its sum if shipment of the goods is considered to be done in installment. In this case guarantee is open for the sum equal to the sum of one shipment and operates during all validity period of the contract. The bank guarantee is not the form of calculations and the tool considered to provide performance of those or other obligations of the parties realized by one of the following types:

Tender guarantee (competitive or tender guarantee). Prevents the case when the enterprise which has submitted the bill does not accept the order made in reply to it.
Execution guarantee. Provides delivery of the goods (services) according to contract conditions.
A guarantee of return of advance payment. Ensures its return at default of conditions of the contract, i.e. untimely shipment (provision of services) which were paid in advance.
Guarantee of payment. Provides obligations on timely payment of the goods delivered or services provided.

Use of bank guarantees of various designs allows to reduce the risks connected with contractual parties to a minimum and to minimize expenses for financing of import deliveries.