How can I use the product?
A bank guarantee can minimize your risks connected with international and domestic business transactions.
In the guarantee document, LBBW Bank CZ a.s. commits to satisfy a creditor's receivable in the case that a third person (the debtor) does not fulfil his/her obligations, if at the same time the conditions defined in the guarantee document are met.
Types of bank guarantees:
- Payment bank guarantee - to guarantee a customer's payment obligation. You, as the supplier, are protected if the customer is insolvent or not willing to fulfil his/her obligations.
- Non-payment bank guarantee - to guarantee the fulfilment of a debtor's obligations other than payment. It serves usually to secure the obligations of the seller and protects you - the customer, from non-fulfilment of the conditions stipulated in a contract.
LBBW Bank CZ a.s. issues guarantees:
- in an exporter's name - a guarantee to the customer that the exporter will fulfil his/her contractual obligations;
- in an importer's name - a guarantee to the supplier that the importer will fulfil his/her payment obligations;
- indirect guarantees - the payee's bank will give the order (a counter-guarantee) to another bank, which then issues its own guarantee in the beneficiary's favour.
Based on a bank guarantee, LBBW Bank CZ a.s. always provides financial fulfilment, even though the guarantee may provide for another kind of fulfilment. The bank guarantee is an irrevocable obligation of the bank to pay an amount set in advance in the event that a supplier does not realize a contract or if the customer does not pay for goods or services. In the event that an obligation secured by a bank guarantee is not fulfilled, the bank must fulfil its obligation immediately.
What are my benefits?
- Thanks to a bank guarantee, you have the certainty that the bank will fulfil its obligations immediately.
- You can use a bank guarantee to secure other payment instruments (with the exception of a documentary letter of credit).
- A bank guarantee gives a supplier the certainty that he/she will get paid once the contractual obligations are fulfilled. He/she is protected from insolvency or the reluctance of his/her business partner.
- For the customer, the bank guarantee represents protection in case the supplier does not fulfil his/her obligations.
What else do I need to know?
In case you are interested in this product, you will have to negotiate the condition for the bank guarantee issue with us before you undersign the purchase contract with your business partner.
The relationship is defined in the "Contract on a Bank Guarantee". An integral part of this contract is the "issue order", in which the following details must be stated unambiguously: the guarantee subject, the guarantee type, the guarantee beneficiary, the amount and duration of the obligation, the contract to which the guarantee is related, the payment conditions, etc.
The payee shall pay a commission to the bank for the guarantee issue and over the whole period of the guarantee duration. The commission amount is set individually and depends on the payee's creditworthiness and the quality of obligation securing. Other fees are charged on the basis of the valid "List of Charges and Commissions".
