The forms of bank guarantees are classified according to various criteria.
Conditional and unconditional, that is, on-demand: characteristics with respect to payments to the beneficiary. Unconditional bank guarantee - the bank's obligation to pay a certain amount to the beneficiary on the basis of the requirements for payment. A conditional guarantee is different in that the bank undertakes to pay a certain sum to the beneficiary, but subject to the provision of the document, which confirms the non-payment of the principal amount.
Urgency and irrevocability - signs of a bank guarantee of quality. The basis of it is the fact that the bank can not unilaterally refuse to pay the beneficiary. Borrowers prefer is revocable bank guarantees, as there are fears among the beneficiaries.
The forms of bank guarantees are secured and unsecured.
In the first case, it is understood that the bank guarantee implies the presence of collateral as security. The key can be any property that is owned by the principal - the goods, equipment, real estate, securities.
Accordingly, unsecured bank guarantee has based its support and issued a written commitment of the bank, that is the guarantor.
Confirmed by a bank guarantee. Its essence is that a bank that has an obligation to the beneficiary, in part or in full confirms a bank guarantee.
Syndicated bank guarantee issued by the main bank of several banks. Such safeguards are typical for large transactions, domestic or international. The more banks involved in the transaction, the higher the value of syndicated bank guarantee.
In addition to all of the above distinctions bank guarantees are divided into direct and counter-guarantees. In the case of the conclusion of a direct bank guarantee, the obligation to make payments on the bank, but when it comes to counter-guarantee, then this means that the bank issuing the guarantee, may require counter-charges from another bank - the participant of the transaction, if the principal asks for it in writing.
In dependence on the possibility of transferring to another person, non-transfer requirements for guarantees, bank guarantees are transferred and non-transferable. Conditions and procedure for transfer of the requirements stipulated by the beneficiary directly to the written agreement of the bank guarantee. The guarantor shall be liable to the beneficiary for failure to perform or breach.
This may be a delay in the payment amount or part thereof, failure to pay the guarantee, the delay in payment. For failure to fulfill obligations to the guarantor's responsibility, since the bank guarantee is cash in nature. Bank guarantee can not be withdrawn, unless specified above. It also guarantees the right to review should relate to the terms of the principal and the guarantor of the grant assurances.
