The purpose of a payment Guarantee is to cover the Applicant/Instructing Party’s ability to meet its payment obligations and the most common type covers the buyer’s obligation to pay for goods received or services rendered. Once the Beneficiary has performed the contract by delivering the goods or by completing the work (and the buyer does not meet its payment obligation, due to a lack of ability or a willingness to pay), the Beneficiary may demand payment under the Guarantee, usually for the full amount of the contract or, in case of down payment already settled, for the outstanding amount.
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