The bank offers other types of guarantee operations: the company that buys an application for accreditation from a bank for which it already has a line of credit or a line of credit (LOC). The bank issuing the accredits withholds payment on behalf of the buyer until it obtains confirmation that the goods were shipped during the transaction. After the goods have been shipped, the bank would pay the wholesaler its due date as long as the conditions of the sales contract are met, such as for example. B delivery before a certain period or confirmation from the buyer that the goods have been obtained with complete peace of mind. A bank guarantee is valid for a specified amount and period. It clearly indicates the circumstances in which the guarantee applies to the contract. A bank guarantee can be either financial or depending on the results. Bank guarantees are a more important contractual obligation for banks than loans. A bank guarantee, such as a credit, guarantees a sum of money to a beneficiary. The bank only pays this amount if the counterparty does not fulfil the obligations set out in the contract. Warranty can be used to insure a buyer or seller essentially before loss or damage due to non-performance by the other party in a contract.
Bank guarantees are like any other type of financial instrument – they can take a variety of different forms. For example, guarantees are issued directly by banks, both in Switzerland and abroad. Indirect guarantees are generally issued when the object of the guarantee is a governmental authority or other public body. As such, they might wish to enter into a contract with a small metal hut located in the same industrial area. Since the small supplier is relatively unknown, the large company requires the seller to provide a bank guarantee before withdrawing a machine parts contract worth $US 300,000. In this case, the large company is the beneficiary and the small seller of the applicants. In addition to the normal bank guarantees, VTB Bank also provides compensation. A security is an obligation that is independent of liability for the principal debt or the agreement between the creditor and the principal debtor.
By granting a guarantee, a bank undertakes to pay on the first request, provided that all the conditions laid down in this guarantee are met. The customer may be asked to provide other documents, for example.B. documents confirming the client`s legal capacity and the authority of its officers, as well as financial statements. . . .