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Guarantee for the correct implementation of a contract (security)

A guarantee for the correct implementation of a contract is a non-payment guarantee and represents an irrevocable obligation on the part of the bank to pay a financial sum specified in advance if the supplier (mandator) does not meet the contractual obligations of a delivery in respect of quantity, quality, deadlines and other conditions, e.g. installation, training, etc.

Advantages

  • The guarantee represents a reliable security of the mandator’s obligation, while its recipient (beneficiary) is secure in the knowledge that it will receive a settlement from Raiffeisenbank if the mandator does not abide by the conditions of the contract as covered by the guarantee.
  • The guarantee reinforces the creditworthiness of the supplier (mandator) in relation to the customer (recipient/beneficiary).

A guarantee for the correct implementation of a contract is a suitable instrument to ensure that contractual conditions are observed by the supplier.

Drafting a guarantee for the correct implementation of a contract and the settlement from the guarantee

  • Upon being requested by the client Raiffeisenbank drafts a guarantee for the correct implementation of a contract to the level and for the term specified in the contractual conditions.
  • In the application for a guarantee to be drafted the client submits documents containing the conditions and requirements under which a settlement is to be made under the terms of the guarantee.
  • In the contract on the provision of a guarantee the client agrees that, if Raiffeisenbank is requested for payment in accordance with the terms and conditions of the guarantee, then it will pay this sum irrevocably to the benefit of the guarantee recipient (the beneficiary).
  • Given that the guarantee represents an irrevocable obligation, Raiffeisenbank may not change the conditions of the guarantee to the detriment of the recipient (beneficiary) or cancel the guarantee without the consent of the recipient (beneficiary).
  • Raiffeisenbank will make a payment under the guarantee only if it receives a request for payment submitted by the guarantee recipient (beneficiary) in accordance with the terms and conditions of the guarantee.

Security

Raiffeisenbank will inform the client of the need to secure the guarantee depending on the results of its audit of the client’s creditworthiness.

Course of the guarantee

 


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