Guarantees

A bank guarantee provides the beneficiary with access to a sum of money if the counterparty fails to fulfil contractual or other obligations in respect of an underlying transaction, contract or order. Using HSBC for issuance or servicing guarantees is a best choice, ensuring financial surety of the instrument and highest standards of processing. We can discuss with you the implications of using the International Chamber of Commerce, Uniform Rules for Demand Guarantees. We can make our standard wording available if required. If you are uncertain of the effect of any of the terms or conditions of a guarantee, we recommend you seek independent legal advice.

HSBC can offer you a full range of bank guarantees:

Tender Guarantees/Bid Bonds

Often called for in support of contract tenders, particularly in international trade situations. Provide the beneficiary with a financial remedy if the applicant fails to fulfil any of the tender conditions. Normally submitted with the other documents called for in the invitation to tender and remain valid during the period of tender, plus a grace period to allow the beneficiary to make demand.

Performance Bonds

Most common form of guarantee, used in a variety of situations. Normally required at the time of commencement of the contract and will extend over the duration of the contract, plus a grace period to allow the beneficiary to make demand in the event of non-performance of the obligations covered by the guarantee.

Advance Payment Guarantees

Used where the applicant calls for the provision of a sum of money at an early stage of the contract. The beneficiary can recover the amount paid in advance, or a part thereof, if the applicant fails to fulfil their underlying contractual obligations.

May provide for pro rata reductions to the guarantee amount on presentation of certain documents or on a specified date or dates.

Duration will depend on the underlying contract, but many run up to the anticipated date of the final delivery, plus a grace period to allow the beneficiary to make demand in the event of non-performance of the obligations covered by the guarantee.

Payment/Trade Debt Guarantee

Provide financial security to the beneficiary should the applicant fail to make payment for the goods or services supplied. Such guarantees will invariably run up to the final scheduled date of payment, plus a grace period to allow the beneficiary to make demand in the event of non-payment.

Key features and benefits:

• A guarantee is a separate transaction from the underlying commercial contract on which it may be based.
• HSBC acts as the guarantor, and will not be involved or bound by the underlying commercial contract.
• The wording of a guarantee is a matter for negotiation between the Applicant (you) and the Beneficiary (your customer).
• Our centralised specialist Guarantees Team – together with our global network of offices can provide you with a real competitive advantage in the market place. Talk to us, even if you don't bank with HSBC.