BOND GUARANTEE TENDER GUARANTEE

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BID BOND or TENDER GUARANTEE (for participating in tender bids) The Bid Bond is the guarantee required for participation in tender bids as an alternative to the security deposit. The bid guarantee may be required for participation in a tender for the award of contracts for the supply of goods or services, plants, or for the execution of works mostly commissioned by government entities. - It is issued for an amount ranging from 1% to 10% of the contract value.

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PERFORMANCE BOND (guarantee of supply execution) With the Performance Bond, the issuing Bank undertakes, on behalf of the supplier, to pay the contracting authority/beneficiary the guaranteed amount, should the supplier fail to fulfill their contractual obligations.

 

In particular, it guarantees:

• that the supply will be executed within the contractually agreed terms; - the contractual obligations towards the buyer/contracting authority: installation, commissioning of machinery and/or plants, completion of construction works, proper functioning, etc. It is issued for an amount ranging from 5% to 20% of the Supply value.

 

ADVANCE PAYMENT BOND (advance payment refund guarantee) The guarantee of the advance payment and/or advance payment refund is issued by the seller's Bank in favor of a buyer/contracting authority and usually represents a value ranging from 10% to 30% of the contract. It is issued prior to the receipt of the advance payment, allowing the buyer to be reimbursed for the advance payment if the supplier fails to perform the agreed-upon service (e.g., supply of goods).

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WARRANTY BOND (Warranty for defects in work) The Warranty Bond is a guarantee through which the Client protects themselves in case of failure to rectify any defects that may arise during the warranty period for the works. In most cases (or in international contracts of medium to large scale), it is issued at the Contractor's request and involves the payment of a certain amount to the Client in case (during the warranty period for the works) the defects reported by the Client are not rectified by the Contractor. Among the guarantees used in international contracts, the Warranty Bond is very common in contracts for the construction of large-scale production plants and infrastructure works.

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PAYMENT BOND (payment guarantee) With the payment guarantee, the buyer's Bank undertakes, for a certain period, to execute the payment for goods and/or services to the seller/beneficiary upon simple request from the Bank where the guarantee was opened, in case the buyer fails to do so within the contractually specified timeframes.