Under a guarantee payable on demand, the bank will typically pay against a declaration of breach of contract or default. Under a conditional guarantee, the bank will wait for confirmation that the condition has been satisfied before paying. UK/Irish banks are reluctant to issue conditional guarantees.
Bid or tender bonds are issued by the bank on behalf of an exporter to protect the importer in cases where the exporter's bid is accepted under a tender process but the exporter fails to sign the contract.
A performance bond is also issued by the exporter's bank and will reimburse the importer if the exporter fails to fulfil its obligations under the contract.
A direct guarantee is issued by Danske Bank and sent directly to the beneficiary or sent via their bank. By comparison, if Danske Bank asks a foreign bank to issue a guarantee on our behalf, Danske Bank issues a counter-guarantee as security.
If Danske Bank issues a counter-guarantee, it usually means that there are more expenses incured than would arise for a direct guarantee. Generally, the guarantee will not be subject to law of Ireland, which for example can mean that an expiry date might not be respected.
If a guarantee is issued with an expiry date, it means that the guarantee is no longer valid after this date provided the guarantee is subject to law of Ireland. If subject to foreign law, the beneficiary's country may fail to recognise this and hold the guarantee valid for claims after the expiry date.
If there is no expiry date in the guarantee, the guarantee can be cancelled only when either the original guarantee is returned to Danske Bank or when we receive notice that we are released from our obligations.
Read more about Trade Finance products and services.Download fact sheet on Documentary Credits (169 KB)Download fact sheet on Guarantees (PDF 86 KB)Download fact sheet on Collection ( 96 KB)Download fact sheet on Business eBanking (90 KB)Download Adobe Reader® to read pdf files.