Guarantees

A bank guarantee secures the fulfillment of obligations of your business partner according to the agreement.

Types of bank guarantees

A bank guarantee is a written irrevocable undertaking of the bank on the instructions of the principal to pay to the beneficiary a stated sum of money if the principal fails to perform obligations under contract.

If a demand guarantee is issued, the bank is to pay to the beneficiary upon receipt of beneficiary’s first written demand conforming with the terms and conditions of the guarantee.

If an accessory guarantee (suretyship) is issued, the bank is to pay to the beneficiary only with applicants consent, or when it has been proved to Nordea by final judgement, arbitral award or settlement in court between the parties that the beneficiary is entitled to receive the amount.

Types of bank guarantees:

• bid bond guarantees that organizers of the tender will receive a definite sum of money from the bank if the bidder refuses to sign the agreement after winning the bid
• advance payment guarantee secures the repayment of the advance payment by the bank if the principal fails to perform under the agreement
• performance bond guarantees that the bank will pay a definite sum of money if the principal fails to perform under the agreement
• warranty guarantees that the bank will pay a definite sum of money if the principal fails to fulfill his warranty obligations under the contract.
• payment guarantee secures that the bank will pay for goods or services if the buyer fails to make the payment for the goods or services
• loan guarantee secures the claim of the lender against the debtor
• customs surety secures that the bank will pay a definite sum of money to State Revenue Service to settle the debt obligation of the principal under customs procedures.