Bank of Baku

Guarantee - being the obligation of the Bank to the beneficiary, is an agreement to make a payment of the specified amount of money to the beneficiary in case of the failure of the counter-party to perform its obligations. Otherwise, it can be said that the guarantee is a written undertaking by the guaranteeing bank to make the payment upon written request and submission of other documents indicated in the guarantee.

Bank guarantees are regulated by the laws of the country at the place of location of the issuing Bank. Occasionally, Uniform Rules for Demand Guarantees (URDG) ICC Publication 458) will apply.

Bank guarantee, being independent from the main sale and purchase agreement, is designated to ensure the performance of obligations undertaken by the applicable party. Payment under guarantee is made by the guaranteeing bank upon the first written demand of the beneficiary, without any investigation (except for review of accuracy of documents submitted by the beneficiary Benefits of using guarantees in trade transactions:

• Assurance as to high quality and perfect performance of conditions of the sale and purchase transaction
• Absence of risk of the seller for non-payment for delivered goods or provided services
• Cooperation with a reliable partner – bank and boosting of international reputation
• Opportunity to have various problems arising in course of trade transactions or implementation of projects faster and with fewer losses when acting through the partner – bank
• increase of number of potential partners