In the business world full of risks, performance guarantee has emerged as a "financial leverage" to help businesses confidently sign contracts, increase the chance of success and optimize profits. Let's [website name] uncover the mystery of what a performance guarantee is and issues related to this financial instrument.
What is a contract performance guarantee?
A contract performance guarantee is a legal commitment between the guarantor and the beneficiary, according to which the guarantor commits to perform the obligations of the guaranteed party if that party fails to perform or improperly performs its obligations under the contract.
Thereby, this guarantee ensures the correctness and completeness of the implementation of the commitments in the contract signed between the guaranteed party and the beneficiary.
Rights and obligations of the parties participating in the contract performance guarantee
The rights and obligations of the parties participating in the contract performance guarantee can be described specifically as follows:
The contract performance guarantee party
The guarantor, one of the important parties in the contract performance guarantee transaction, will have the following rights and obligations:
Rights of the guarantor:
- Request the guaranteed party or the counter-guarantor and related parties to provide information and documents related to the appraisal of the guarantee and collateral (if any).
- Accept or reject the guarantee request.
- Conduct inspection and supervision of the customer's financial situation during the validity period of the guarantee.
- Be paid the guarantee fees based on the agreed terms and conditions.
- Refuse to perform the guarantee obligation when the request for performance of the guarantee obligation is invalid or there is evidence proving that the presented documents and vouchers are forged.
Obligations of the guarantor:
- Perform financial obligations within the scope of the guarantee commitment, ensure full and proper performance when the guaranteed party fails to perform or performs improperly.
- Respond fully to requests from the guaranteed party, and be jointly and severally liable in cases where more than one party guarantees the same obligation.
Both parties have rights and obligations when guaranteeing the performance of a contract
These rights and responsibilities demonstrate the prestige and commitment of the guarantor in supporting the success of the transaction and maintaining good business relationships.
The party guaranteed to perform the contract
The party guaranteed in a contract performance guarantee transaction has the following important responsibilities:
- Be responsible for paying the guarantee fees according to the agreement.
- Repay in full the obligations that the guarantor has performed on his behalf.
- Ensure the correct and complete implementation of the commitments agreed upon in the contract with the beneficiary.
Both parties must be responsible when guaranteeing contract performance
By strictly complying with these obligations, the guaranteed party demonstrates its reliability and respect for the commitment, thereby helping to create a healthy business environment and increase trust from the guarantor.
The party receiving the contract performance guarantee
In the contract performance guarantee transaction, the guaranteed party has the following rights:
- Request the guarantor to compensate for damages if the guaranteed party violates the contract performance obligation.
- Be exempted from performing the guarantee obligation for the guarantor.
- Check the authenticity of the guarantee commitment.
- Complain to the guarantor and the guaranteed party within 05 working days after receiving the notice of refusal from the guarantor and the party confirming the guarantee if the reasons for refusing to perform the guarantee obligation of the parties are not consistent with the conditions for performing the guarantee obligation in the guarantee commitment;
- File a lawsuit in accordance with the law when the guarantor or the party confirming the guarantee violates the committed obligations.
In this way, the Guarantee Recipient is guaranteed protection and at the same time minimizes risks during the implementation of the guarantee contract.
The beneficiary has the right to claim compensation for damages
Regulations on contract performance guarantees you need to know
In addition to the rights and obligations of the parties participating in the contract performance guarantee, you also need to pay attention to specifically understanding the regulations related to this financial instrument to use it more effectively for your business. Specifically as follows:
Forms of contract performance guarantees
The 2015 Civil Code shows flexibility in the regulations on the forms of contract performance guarantees, allowing the parties to choose the form that best suits their needs and conditions. Accordingly, the guarantee can be issued in writing or electronically, as long as it ensures transparency and completeness of necessary information.
Regulations related to contract performance guarantee
However, in practice, in bidding activities in Vietnam, the use of letters of guarantee issued by reputable credit institutions and banks is still the most popular form. The advantages of this form lie in its professionalism, ensuring safety and ease of payment when disputes arise.
Scope of guarantee
The guarantor may commit to guarantee part or all of the financial obligations that the guaranteed party is obliged to perform with the guarantee recipient.
Validity period of the guarantee commitment.
According to the provisions of Article 20 of Circular 11/2022/TT-NHNN, the contract performance guarantee period is valid for a specific period of time, ensuring that the contractor's obligations are fully and completely performed.
- The validity period of the guarantee commitment is determined from the time of issuance of the guarantee commitment or after the time of issuance of the guarantee commitment as agreed by the relevant parties until the expiration date of the prescribed guarantee obligation
- The validity period of the guarantee agreement is agreed upon by the parties but must be at least equal to the validity period of the guarantee commitment.
- In case the expiration date of the guarantee commitment or the guarantee agreement falls on a day off, holiday, or New Year's Day, the expiration date will be transferred to the next working day.
- The extension of the validity period of the guarantee commitment and guarantee agreement shall be agreed upon by the parties in accordance with relevant legal provisions.
The term of the guarantee commitment is maintained for a specific period of time
Agreement on granting a guarantee
According to Article 15 of Circular 11/2022/TT-NHNN, the guarantee agreement must have the following contents:
- Applicable law. In case the applicable law is not specifically stipulated, it is understood that the parties agree to apply it according to Vietnamese law.
- Information about the parties in the guarantee relationship.
- Guaranteed obligations.
- Guarantee amount, guarantee currency.
- Form of issuing the guarantee commitment.
- Conditions for performing the guarantee obligation.
- Rights and obligations of the parties.
- Guarantee fee.
- Agreement on compulsory debt payment, interest rate applicable to the amount paid in lieu and debt repayment obligation when the guarantee obligation must be performed.
- Number, date of signing, validity of the guarantee agreement.
- Resolution of arising disputes
- Other contents not contrary to the provisions of law.
- The amendment, supplement or cancellation of the content of the guarantee agreement shall be agreed upon and decided by the relevant parties on the basis of ensuring compliance with the provisions of law.
Some agreements are stipulated in Circular 11/2022/TT-NHNN
Termination of contract performance guarantee
According to Article 23 of Circular 11/2022/TT-NHNN, the guarantee obligation terminates in the following cases:
- The obligation of the guaranteed party terminates.
- The guarantee obligation has been performed in accordance with the guarantee commitment.
- The guarantee is canceled or replaced by another security measure according to the agreement of the guarantee recipient and the guarantor, other related parties (if any).
- According to the agreement of the parties.
- The guarantee recipient is exempted from performing the guarantee obligation for the guarantor.
- The guarantee commitment has expired.
Contract performance guarantee can be terminated in many cases
Where should you use the contract performance guarantee service safely?
Contract performance guarantee is an important service that helps ensure the safety of business transactions. However, choosing a reputable and reliable service provider is not easy. So, where should you use the contract performance guarantee service safely?
With prestige and many years of experience in the financial sector, SeABank is proud to provide a safe and effective contract performance guarantee service, meeting the diverse needs of customers. Below are the reasons why you should choose the contract performance guarantee service at SeABank:
- Safety: SeABank is a leading prestigious bank in Vietnam with strong financial potential, ensuring full and timely payment to the beneficiary.
- Fast: The guarantee procedure is simple and quick, helping businesses save time and costs.
- Flexible: SeABank provides a variety of guarantee products to suit the needs of each customer, from bid guarantees to payment guarantees.
- Competitive guarantee fees: SeABank always offers the most competitive fees on the market, helping businesses optimize costs.
- Professional team: SeABank's staff is experienced, enthusiastic in consulting and supporting customers throughout the service usage process.
SeABank's contract performance guarantee service is fast and convenient
In short, contract performance guarantee acts as a powerful financial lever, helping businesses increase their competitiveness, expand cooperation opportunities and confidently implement large projects. With SeABank's contract performance guarantee service, businesses can completely trust in a safe, effective and optimally economical guarantee solution.
Contact SeABank immediately at website or Hotline 1900.599.952 (KHDN) for advice and experience the most professional and reputable contract performance guarantee service in the market. SeABank will always commit to accompanying businesses on the path of sustainable development and success.
