Types of Bank Guarantee

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There are two main types of bank guarantee. The first of these is a Direct Bank Guarantee. A direct bank guarantee is a guarantee which will result in payment directly to the beneficiary. The second type of bank guarantee is an Indirect Bank Guarantee. An indirect bank guarantee is payable not directly to the beneficiary, but to the beneficiary’s bank.

  1. Guarantee of payment. This type of guarantee is a security of payment obligations of Buyer to Seller. This type of bank guarantee are used in grain trade in Ukraine .a lots of exporter prefer this type of payment to secure the deal.
  1. Guarantees of advance payment return. This guarantee represents an obligation of the bank to return advance payment in the event that, after receiving an advance, the Seller does not perform its contractual obligations. This can be an Indirect Bank Guarantee.
  1. Contract execution guarantee. This guarantee is a security of timely delivery of goods or performance of services according to a contract.
  1. Tender guarantees. This guarantee plays a role of security in those cases when the Company fails to perform its obligations to tender organization or other party that is stipulated in the order received by winning the tender.
  1. Guarantee in favor of the customs authorities. This guarantee is a security of obligation of the company performing import and export operations to the Customs authorities for payment of customs taxes and duties.
  1. Guarantees of warranty execution. This guarantee plays a role of security of quality for delivery to the contract terms.

7. Guarantee of credit return. This guarantee is a security for repayment of credit.

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