Guarantees
An international guarantee is a written undertaking by a guarantor, usually a bank, to ensure that a supplier or contractor receives compensation in the event of a breach of contract.
There are several different types of guarantee, and more than one type can be included in a contract.
Demand guarantee
Requires payment on the first demand. As soon as the issuing bank receives a claim that fulfils the conditions of the guarantee, the issuing bank must pay. This means that the applicant has no right to object.
Conditional guarantee
Requires payment only upon the fulfillment of certain conditions. The issuing bank will not pay beneficiary's claim before it has been accepted by the applicant or a court decision stipulates payment. (But please note that a beneficiary will rarely accept a guarantee payable on agreement, and banks in the UK are reluctant to provide such forms of guarantee.)
Guarantees are subject to local rules and regulations
Local conditions and regulations influence whether it is Northern Bank that will issue the guarantee or a local bank, in the beneficiary's country, against Northern Bank's counter guarantee.
If a guarantee is issued by a local bank in the beneficiary's country, it will not be subject to Northern Irish law. This would mean that although the expiry date has passed, the local laws in the beneficiary's country may fail to recognise this and hold that the guarantee may be valid for claim beyond the expiry date. If a guarantee is issued by a local bank, you would be liable to pay its commission and fees.
Guarantees from abroad
If you are to receive a guarantee from abroad and you would prefer Northern Bank to underwrite the guarantee, we are prepared to issue guarantees on behalf of most banks worldwide.
Contact
Get in touch with your local branch:
Find your branch
.
Download application form
The forms you need when using guarantees are available in
PDF files
.
Glossary
Read more about
counter-guarantees
and other technical matters.
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