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There are different types of Bank Guarantees. Each worded for specific events and purposes.
There are effectively two main types of Bank Guarantees:
(1) A Direct Guarantee where the account holder instructs his bank to issue a Guarantee directly in favour of the Beneficiary, and
(2) An Indirect Guarantee where a second bank is requested to issue a Guarantee in return for a counter-Guarantee. In this case the Issuing Bank will indemnify losses made by this second bank in the event of claim against the Guarantee.
The most purposes for the uses of Bank Guarantees are:
- Advance Payment Guarantee
- Performance Guarantee (Performance Bond)
- Payment Guarantee
- Conditional Payment Guarantee (Conditional Payment Undertaking)
- Guarantee securing a Credit Line
- Order & Counter Guarantee