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Performance Guarantee

Name

Performance Guarantee

Introduction

Performance guarantee is a written document issued by Bank of China Brussels Branch at the request of the customer to the owner of a contracted project or the buyer of a sales deal, guaranteeing that the applicant will strictly perform the duties under contract agreements or supply contracts.

Functions

1. It guarantees the performance of the contract;

2. It guarantees the conformity of quality of subject matters to the requirements;

3. It eliminates the mistrust between both parties of a contract; by replacing cash margin with performance guarantee, the tied up capital of contractor of a project or supplier can be substantially reduced.

Features

1. It solves the problem of mutual mistrust between both parties of a transaction, and ensures the performance of obligations of a contract. With the good reputation, Bank of China Brussels Branch serves as a guarantor during the performance of a commercial contract to provide guarantee for both parties to the contract, ensuring the successful execution of the transaction and the conformity of quality of subject matters to the requirements.

2. If the contractor of a project or supplier breaches the contract, the owner or buyer will receive the indemnity while the default party will be economically punished, therefore effectively reducing the possibility of breach and avoiding the cost incurred by arbitration or proceeding to solve disputes related to the performance.

Charges

The charges are subject to the charging principle and rate applied in the relevant rules of Bank of China Brussels Branch.

Target Customers

1. Contractors to the engineering projects;

2. Suppliers to the material procurement projects;

3. Sellers to the shipbuilding projects;

Application Qualifications

1. The applicant shall have a corporate account in Bank of China Brussels Branch;

2. The applicant shall hold a business license of a legal person that has passed the annual inspection or other valid official certificates which fully prove its operation and scope of business;

3. The applicant shall be qualified to engage in relevant business (such as qualification of contracting foreign projects, and qualification for construction projects);

4. The applicant shall have a credit line in Bank of China, or pay full counter guarantee acceptable to Bank of China or full margin.

Procedure

1. Application for letter of guarantee

(1) The applicant fills in an application form;

(2) The applicant pays margin or submits other counter guarantee;

(3) The applicant submits primary documents related to the business background (such as preliminary contracts);

(4) The applicant submits other documents necessary for issuance of a letter of guarantee as required by Bank of China Brussels Branch.

2. Verification and issuance of letter of guarantee

(1) Bank of China Brussels Branch examines the customers' credit standing, qualification, underlying transaction background and relevant documents;

(2) Bank of China Brussels Branch examines the application and form of letter of guarantee for irregularities;

(3) Bank of China Brussels Branch checks and confirms the customer's credit line, margin or other counter guarantee;

(4) Bank of China Brussels Branch issues the letter of guarantee.

Tips

1. Amendment to letter of guarantee: At the request of the guaranteed party and the beneficiary, the clauses under the letter of guarantee can be amended, for example, the validity period can be extended.

2. Payment/compensation of letter of guarantee: If the beneficiary claims compensation within the validity period of the guarantee, the applicant shall be notified in time. The payment shall be made after Bank of China Brussels Branch verifies the claim documents and confirms that they are in compliance with the claim clauses under the guarantee.

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