About guarantees

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 (the customer who has requested the bank to issue the guarantee) has no right to object.

Conditional guarantee
Requires payment only upon the fulfilment of certain conditions. The issuing bank will not pay the beneficiary's claim before it has been accepted by the applicant or a court decision stipulates payment. (But note that a beneficiary will rarely accept a guarantee payable on agreement and banks in the UK are 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 the guarantee is issued by a local bank in the beneficiary’s country, it will not be subject to Northern Irish law. This may mean, for example, that although the expiry date has passed, the local laws in the beneficiary’s country may fail to recognize 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.

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