Early / Advance Payment Bank Guarantee Model

It is frequent contractors and suppliers ask for down-payments in order to start a job. Although the right answer is always to make a payment in exchange of an achieved milestone, Contracts & Procurement professionals face instances where there is no other choice than performing down-payments.

At the time of performing a down-payment, the company needs to reflect on the risk of default from one or more contractor(s) and supplier(s) in reimbursing the advanced money paid to them.

In those cases, the only possible protection is to ask the contractor or supplier to provide an on demand, irrevocable, primary bank guarantee in order to make sure nothing will prevent the company to recover its funds in case of default.

The model provided here is in the form of a deed governed by the British Laws and Courts.