discuss the various kinds of bonds/guarantees in project export
Answers
Answer:
The various types of guarantees and bonds of international trade are the tender bond, Performance bond, Advance payment bond, Retention bond, and Payment guarantee.
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Explanation:
Types of Bank Guarantees
Types of Bank Guarantees1. Direct or Indirect Bank Guarantee:
A bank guarantee can be either direct or indirect.
guarantee can be either direct or indirect.Direct Bank Guarantee It is issued by the applicant's bank (issuing bank) directly to the guarantee's beneficiary without concerning a correspondent bank. This type of guarantee is less expensive and is also subject to the law of the country in which the guarantee is issued unless otherwise it is mentioned in the guarantee documents.
guarantee can be either direct or indirect.Direct Bank Guarantee It is issued by the applicant's bank (issuing bank) directly to the guarantee's beneficiary without concerning a correspondent bank. This type of guarantee is less expensive and is also subject to the law of the country in which the guarantee is issued unless otherwise it is mentioned in the guarantee documents.Indirect Bank Guarantee -- With an indirect guarantee, a second bank is involved, which is basically a representative of the issuing bank in the country to which beneficiary belongs. This involvement of a second bank is done on the demand of the beneficiary. This type of bank guarantee is more time consuming and expensive too.
2. Confirmed Guarantee
2. Confirmed GuaranteeIt is cross between direct and indirect types of bank guarantee. This type of bank guarantee is issued directly by a bank after which it is send to a foreign bank for confirmations. The foreign banks confirm the original documents and thereby assume the responsibility.
3. Tender Bond
3. Tender BondThis is also called bid bonds and is normally issued in support of a tender in international trade. It provides the beneficiary with a financial remedy, if the applicant fails to fulfill any of the tender conditions
4. Performance Bonds
4. Performance BondsThis is one of the most common types of bank guarantee which is used to secure the completion of the contractual responsibilities of delivery of goods and act as security of penalty payment by the Supplier in case of nondelivery of goods.
5. Advance Payment Guarantees
This mode of guarantee is used where the applicant calls for the provision of a sum of money at an early stage of the contract and can recover the amount paid in advance, or a part thereof, if the applicant fails to fulfill the agreement