According to Vietnam Law on Credit Institution, and Circular
07/2015/TT-NHNN on bank guarantee, bank guarantee refers to a type of
credit whereby the guarantor undertakes to act on behalf of the obligor to
fulfill their financial obligations to the obligee in the event the obligor
fails to fulfill or insufficiently fulfill their agreed-upon obligations to the
obligee; the obligor must take on their debt obligations and repay the
guarantor.
Guarantee commitment is the written document issued by the
guarantor or the counter-guarantee issuing party or the guarantee-confirmation
issuing party.
Letter of guarantee refers to the written commitment between
the guarantor and the obligee to the guarantor’s fulfilling the financial
obligation on behalf of the obligor in the event the obligor fails to fulfill
or insufficiently fulfill agreed-upon obligations to the obligee.
To avoid confusion of bank, it is common to
issue non conditional and irrevocable bank guarantee. Having said that,
the bank will release payment upon the first request from the obligee without
the obligations to verify any contract non-performance.
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