An international guarantee is a written undertaking by a guarantor, usually a bank, to ensure that a supplier or contractor receives compensation in the event of a breach of contract.
There are several different types of guarantee, and more than one type can be included in a contract.
Demand guarantee
Requires payment on the first demand. As soon as the issuing bank receives a claim that fulfils the conditions of the guarantee, the issuing bank must pay. This means that the applicant has no right to object.
Conditional guarantee
Requires payment only upon the fulfillment of certain conditions. The issuing bank will not pay beneficiary's claim before it has been accepted by the applicant or a court decision stipulates payment. (But please note that a beneficiary will rarely accept a guarantee payable on agreement, and banks may be reluctant to provide such forms of guarantee.)
Guarantees are subject to local rules and regulations
Local conditions and regulations influence whether it is Danske Bank that will issue the guarantee or a local bank, in the beneficiary's country, against Danske Bank's counter guarantee.
If a guarantee is issued by a local bank in the beneficiary's country, it will be subject to the law of the country in question. This would mean that although the expiry date has passed, the local laws in the beneficiary's country may fail to recognise this and hold that the guarantee may be valid for claim beyond the expiry date. If a guarantee is issued by a local bank, you would be liable to pay its commission and fees.
Guarantees from abroad
If you are to receive a guarantee from abroad and you would prefer Danske Bank to underwrite the guarantee, we are prepared to issue guarantees on behalf of most banks worldwide.