ADVANCE PAYMENT BANK GUARANTEE - MEANING

Advance Payment Bank Guranatee  used as a security against Advance Amount paid. For Example, when any customer give any advance amount to their supplier and then that customer have no surety that supplier will deliver the goods or render the service on time and as per the agreement.

In such cases as per the agreement between the supplier and the customer, when the customer give advance amount to the supplier at the same time the supplier required to submit the Advance payment bank guarantee  to the customer  carrying the same amount of advance paid.

In this case , if supplier did any breach of contract, then the customer can submit this  Bank Guarantee to the bank and can claim for the amount mentioned in the bank guarantee.

Normally the customer  will return this advance payment bank guarantee to the supplier , when the supplier delivered the goods or render the services equal to the advance amount received.