Standard guarantee texts

The most common bank guarantee types in an export transaction are:

A bid bond/tender guarantee is usually issued for an amount up to 5 percent of the value of the tender. In such a guarantee, the guarantor undertakes to compensate the loss incurred by the company inviting the tender as a result of the company submitting the tender's refusal to sign the contract, tender withdrawal or failure to provide a performance guarantee in accordance with the contract.

An advance payment guarantee is issued when the buyer/manufacturer pays the contract price or part thereof in advance and requires security for a refund if the merchandise is not delivered, or if the delivery is not in accordance with the contract.

A performance guarantee/performance bond secures performance of the seller's/performers contractual obligations.

A warranty guarantee is issued for the warranty period. The guarantor is liable to compensate the buyer/builder for any loss sustained should the seller fail to perform his obligations during the warranty period.

The import guarantees usually cover either the payment of a single delivery, or a number of deliveries on agreed terms.

Previously International Demand Guarantees were issued solely according to national law and rules. However in 1992 the International Chamber of Commerce (ICC) published "Uniform Rules for Demand Guarantees" (URDG 458) to govern Guarantees. However, on 1 July 2010, URDG 758 – the 2010 revision of the URDG has been implemented. As from 1 July 2010 URDG 758 will apply when the guarantee states that it is issued subject to URDG.

The texts are provided for reference and guidance purposes only. Any individual guarantee to be issued by the bank shall be separately drafted for the relevant case. The bank assumes no responsibility for the use by visitor's to the website of these guarantee texts. The texts are subject to Nordea General terms for use of web site.