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Performance Guarantee
2021-11-25
Definition of product
It refers to the written document which our bank issues to the owner or the buyer at the request of the project contractor or of the supplier of goods, so as to guarantee that the contractor or the supplier strictly fulfills the contractual obligations.
Scope of application
The scope of application is extremely wide, including projects to provide guarantee for the parties to fulfill their contractual obligations; besides, it is commonly used in project contracting, material procurement and other projects.
Functional characteristics
1. In process of engineering contracting, material procurement and other projects, the Owner or the Buyer generally requires the Contractor or the Supplier to pay performance guarantee to restrict behaviors of the other party and avoid losses due to failure of the Contractor or the Supplier to perform their contract obligations hereunder. Performance security is a good substitute for cash deposit.
2. For the Contractor or the Supplier:
Reduce the long-term funds tied up by paying cash deposit, and is beneficial to the obtaining of fund income;
Compared with cash deposit, it can optimize the allocation of limited funds.
3. For the Owner or the Buyer:
Reasonably restrict the behavior of the Contractor and the Supplier, and safeguard their own interests;
Avoid cumbersome procedure of collecting and returning the deposit and improve the work efficiency.
(For more details, please contact nearby branch counters of Guangzhou Rural Commercial Bank or call customer service of our Bank at 961111)
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