What is Bank Guarantee?
There are many people wondering what is a bank guarantee, what is a bank guarantee certificate, what kind of bank guarantee, how the bank guarantee process is and how much is the bank guarantee fee … Let’s find out these things through the article below.
What is Bank Guarantee?
Bank guarantee is a written commitment of the credit institution (the guarantor) to the obligee (the guarantee party) on the performance of financial obligations on behalf of the customer (the guaranteed party) when the customer the airline fails to perform or improperly performs its obligations committed to the guarantee accepting party. The customer must receive the debt and return to the credit institution the amount paid instead.
Characteristics of bank guarantee:
+ Bank Guarantee is a specific commercial (or commercial behavior) transaction.
+ Bank guarantee activities are always carried out by a special entity, a credit institution (mainly banks).
+ In a Bank guarantee, the credit institution is not only a guarantor (like any guarantor in guarantee of civil service performance) but also has the status of a banker. line.
+ Bank guarantee transactions have the purpose and consequence of creating two contracts, including guarantee service contracts and guarantee / guarantee commitments. These two contracts have a causal relationship with each other, affecting each other but still independent of each other in terms of subjects as well as aspects of legal rights and obligations of subjects.
+ A bank guarantee transaction is not a two-party or three-party transaction but a double transaction.
+ Bank guarantee is a transaction established and made based on vouchers. Documentary nature of bank guarantee is shown in the place when the credit institution issues guarantee (guarantee letter) as well as when the guarantee recipient performs the right to request or when the credit institution guarantees to perform the guarantor’s obligations, these subjects are required to set up in writing.
+ Bank guarantee is a type of unconditional guarantee (also called independent guarantee).
Bank guarantee is an important business for banks, businesses and the economy. It not only facilitates enterprises to produce products that meet market demands but also contributes to increasing international trade relations between countries.”