The first demand guarantee is a binding obligation, independent from the commercial contract, by which the bank indemnifies the recipient in relation to the contractual obligations of the exporter or the payment obligations to the importer. 

Bank commitments in the event of default

• By taking a risk on the solvency of their client, the ordering financial institution commits, on behalf of their client, to pay the recipient. (direct guarantee) 
• The recipient’s bank (local bank) commits to the payment of their client via the use of a counter-guarantee issued by the ordering financial institution, covering their insolvency and the related country risks. (indirect guarantee) 

Technical expertise within the regulatory framework 

• Banks have the responsibility to check if the request is in-line with the terms of the guarantee.
• The Uniform Rules for Demand Guarantees (URDG 758 of the International Chamber of Commerce) and/or local laws.

• You are positioned in the public or private markets,
• You must put in place guarantees with the aim of reassuring your clients of your ability to execute the contract,
• You wish to be assured of the commitments made by your partner’s bank.

MARKET GUARANTEES

Bid bonds

• Importer - Recipient: Guard against a defaulting exporter: withdrawal of offer, refusal to sign contract, refusal to issue other guaranties
• Exporter - Payer: Participate in a Request for Proposal (RFP) and show your seriousness

Advance payment guarantee

• Importer - Recipient: Ensure reimbursement of funds in the event of non-compliance of contractual obligations by the exporter
• Exporter - Payer: Obtain the necessary deposit to cover a portion of the costs that you will require for this contract 

Performance guarantee

• Importer - Recipient: Ensure the proper execution of service provision by the exporter
• Exporter - Payer: Guarantee your seriousness and your ability to carry out the contract

Retention money guarantee

• Importer - Recipient: Insure you in the event of non-compliance with the contractual obligations during the technical guarantee period (*)
• Exporter - Payer: Obtain immediate payment from the previous payment period normally paid at the time the technical guarantee expires (*) 

PAYMENT GUARANTEES (stand-by)

• Exporter - Recipient: Ensure payment by the importer of sums due in the event of non-compliance with the payment obligations

* Period of 12 to 24 months in general, during which the exporter is required to intervene in the event of defects or anomalies in the equipment or assemblies made.

Operating procedure of an indirect guarantee (1st schema) and Operating procedure of a direct guarantee (2nd schema)

Consult us prior to the signing of the commercial contract.

 We will you advise you on:

• the most suitable solution,
• the structure of your procedure (mandatory texts, deadlines, applicable law, etc.),
• banking practices (direct/indirect guarantees, country specificities, etc.),
• the quality of the guarantor bank (in the case of direct guarantee).