Bank Guarantees usually provide a type of monetary assurance to compensate a beneficiary in the event of noncompliance by the applicant with the terms of a contract. They are often used instead of cash payments in advance or as performance or bid bonds in international and domestic transactions. In a transaciton secured by a guarantee, the beneficiary looks first to the account party for payment before seeking payment from the bank. Guarantees can cover financial, performance, as well as trade-related transactions.
