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CS Professional · Strategic Management and Corporate Finance · Raising of Funds - Non Fund Based

A bank guarantee that obliges the bank to pay the beneficiary immediately on first written demand, without the beneficiary having to prove the applicant's default, is known as a:

This is an unconditional guarantee. The bank must pay on the beneficiary's first written demand without examining whether the applicant actually defaulted, unlike a conditional guarantee where stated conditions must first be satisfied.

  1. AConditional guarantee
  2. BUnconditional guaranteeCorrect
  3. CDeferred payment guarantee
  4. DContinuing guarantee limited to one transaction

Explanation

In an unconditional (on-demand) guarantee the bank pays on demand without inquiry into default. A conditional guarantee requires the beneficiary to establish the specified conditions or default before payment.

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