Advance payment must give the provider the means to, for example, to purchase materials and components to deliver the car to the place of manufacture, hire staff or to do other preparatory work. Since this warranty provides for the return of down payment, the seller in case of default of its obligations, it prevents a breach of contract.
Validity
Advance payment guarantee cease to have effect subject to the supply contract. Validity is usually from six months to a year.
Scope
Commercial contracts, contracts for works and services;
Applicant
The seller, contractor or provider of services, which under the contract must make delivery, perform work or provide services;
Beneficiary
The buyer, customer, or the party which provides services wishing to protect themselves against the risk of default down payment, if the applicant does not fulfill his obligation to deliver the goods, works or services in accordance with the contract;
Goal
Coverage of the Applicant to deliver the goods, works or services listed in the advance payment;
Amount
First, the amount of advance payment guarantee consistent, often reduced to the extent that the move operation is carried out or delivery. In the case of advance payment guarantee is necessary to consider two important features:
In order to eliminate the abuse of called guarantees, time of entry into force should be set in conjunction with the bank-guarantor. It requires only unambiguous, verifiable data bank.
Example: "This guarantee shall enter into force only after the amount of down payment in the amount of 100,000 francs for the benefit of the company X will come to us."
Reduction
Often, the principal can achieve that the sum of the advance guarantees for the time is automatically reduced. This happens in particular when there is an agreement on partial deliveries and advance payment guarantee for a certain exposed part of the total order value. The volume reduction is, in principle, is focused on the progress of the implementation of the agreement. This reduces not only the amount of guarantee fees and costs. Relevant evidence may serve as a fulfillment of the relevant documents (eg, marine shipping documents), or the proper use of credit.
The simplest possibility is to establish a clear temporal digression, for example: "The guarantee amount is reduced every 6, 12, 18 and 24 months after entry into force each time by 25%."
taken from http://www.rusbanks.info
