question archive In which of the following trade finance situations would a performance guarantee be procured? * When an exporter wishes to respond to an international public tender that requires all bidders provide cash deposits or an irrevocable guarantee to secure their bids
In which of the following trade finance situations would a performance guarantee be procured? * When an exporter wishes to respond to an international public tender that requires all bidders provide cash deposits or an irrevocable guarantee to secure their bids
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In which of the following trade finance situations would a performance guarantee be procured? *
When an exporter wishes to respond to an international public tender that requires all bidders provide cash deposits or an irrevocable guarantee to secure their bids.
When two parties engage in a bilateral negotiation outside of the tendering process to reassure the foreign importer and strengthen the position of the seller.
When negotiating parties are engaged in a long-term international contract and an instrument is needed to undertake payment of the seller to uphold the terms of the commercial contract to the satisfaction of the importer.
When one of the negotiating parties wants guarantee of financial compensation if a bidder that has submitted a proposal refuses to accept a contract that is being awarded (e.g. due to competing obligations).
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Answer:
- A Performance Guarantee is a contractors promise to complete the project undertaken or a buyer's promise to make payment of the goods delivered.
- A performance guarantee is issued by a bank or an insurance company to guarantee seller's payment in case of default by buyer.
- The trade finance situation in which a performance guarantee be procured: When negotiating parties are engaged in a long-term international contract and an instrument is needed to undertake payment of the seller to uphold the terms of the commercial contract to the satisfaction of the importer.
Answer is c. When negotiating parties are engaged in a long-term international contract and an instrument is needed to undertake payment of the seller to uphold the terms of the commercial contract to the satisfaction of the importer.
