Basic types of guarantees
Bank guarantee is a Bank's obligation to pay the beneficiary a certain amount in case one's counterparty (the principal under the guarantee) fails to fulfill one's contractual obligations.
- A Payment Guarantee ensures timely payment to the supplier for the goods delivered or the work performed under a contract.
- A Bid Bond ensures compliance of all tender participants with the tender conditions (issued for the tender authority).
- A Performance Guarantee ensures compliance of the seller with obligations on delivery of goods or performance of work under a contract.