Tender Bond Guarantee Information
A Tender Bond is also known as Bid Bond or Tender Guarantee. This is an undertaking issued by a provider bank for its client to bid a tender in favor of buyer/developer to secure financial risk in case if the successful bidder fails to enter into the contract. In general, when bidding for an export contract, the potential buyer may require the supplier/exporter to provide a tender bond along with their tender submission.
If and when a supplier is awarded the tender but fails to formalize the export contract or doesn’t issue supplementary guarantees (usually a performance bond) to the buyer when required, then the buyer has the right to call the tender bond which means that they may demand payment of the bond amount from the bond issuer to minimize their losses. As well, whenever a job, trade or project is announced for bid, a company who is a supplier or a contractor who wants to enter in a bid must get Tender Bond Guarantee provider such as banks or insurance company to issue a Tender or Bid Bond Guarantee on behalf of their company. This bond guarantees that the bidder is financially capable to embark on the project or trade and will respect & honor the terms as summarized in the tender.
The amount of a Tender Bond Guarantee is typically a certain percentage of the export or project contract amount. The buyer or developer is called the beneficiary of the bond. Prior to issuing the bid bond guarantee, the provider bank or insurance company normally assesses the supplier or contractor’s commitment and capability to undertake the export contract or construction project before issuing the tender bond. Typically, they will also ask security from the supplier or contractor in case the buyer or developer calls the bond.
A Tender Bond Guarantee is usually issued when you lodge your tender. It remains in force for the term required by the buyer or developer’s tender process. If they fail to get the tender, the buyer or developer returns the bond. On the other hand, if the supplier or contractor wins the tender the buyer or developer will return the bond after the supplier or contractor formalized the export contract or project in terms of Performance Guarantee.
TBG is a vital document to avail a contract of supplying commodities or to get a successful bid in the construction business or industry. It can facilitate the process of selecting a project or contract to run quickly and smoothly. Without bonds, project developers and owners would have very little assurance that the selected bidder is capable to properly finish their project without experiencing difficulties such as problems in their cash flow & that their project is not beyond their means. Moreover, almost every project developers or owners call for a bond from the contractor before they’ll be able to bid on any of their projects. If a seller/contractor wants to get hold of valuable contracts from buyer/developer, then it is imperative that they secure TBG in their favor so they can get their full trust to obtain such contracts.
A Tender Bond Guarantee can be:
The beneficiary can only call the bond when certain conditions are met as mentioned in the bid bond.
The beneficiary can call the bond at any time without providing any cause.
Bronze Wing Trading is a direct provider of Tender Bond Guarantee from Top European Banks and has been successfully assisting their clients to acquire such guarantee bonds.
Tender Bond Guarantee Procedure
To get Tender Bond Guarantee, please follow the below procedure:
1. Seller/Contractor presents their trade deal requirement by submitting contractual agreement or tender documents.
2. BWT will do due diligence on the trade transaction between importer/developer & seller/contractor and informs the concerned party if the TBG request is rejected or approved.
3. If approved, BWT will ask their client to submit further documents and payment being their TBG charges.
4. Upon receipt of documents and TBG charges, BWT will proceed right away and will establish the Tender Bond Guarantee from their bank account with European Bank via authenticated swift MT-760 to the importer/developer’s bank.
Tender Bond Guarantee Video