Unconditional BG
Post 1 of 2
My importer insist that I provide an unconditional BG (instead of DLC) as security before they ship the goods. Can I insert in the BG text that "The BG may only be called upon submission of evidence that the goods are shipped". By do so, does it make it a conditional BG instead of an unconditonal one?
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11 Jun 2007 00:04
Post 2 of 2
Replying to [cemerlang]:
The BG is to make sure that you pay for your purchases. If you do not pay, it will be invoked by the seller. On submission to the BG issuing bank evidence of your failure to pay as per terms, the bank would be called upon to honour the BG. The text of the BG would be worded accordingly.
No additional terms can be inserted, otherwise your party is not likely to accept the BG.
How much a BG can safeguard your interest depends on how it is drafted. Of course, your party should also accept the BG.
This is similar to a standby LC. You may also consider a sight LC instead of a BG. Depends on mutual acceptance and costs.
The BG is to make sure that you pay for your purchases. If you do not pay, it will be invoked by the seller. On submission to the BG issuing bank evidence of your failure to pay as per terms, the bank would be called upon to honour the BG. The text of the BG would be worded accordingly.
No additional terms can be inserted, otherwise your party is not likely to accept the BG.
How much a BG can safeguard your interest depends on how it is drafted. Of course, your party should also accept the BG.
This is similar to a standby LC. You may also consider a sight LC instead of a BG. Depends on mutual acceptance and costs.
11 Jul 2007 04:18
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