Document background
The Advance Payment Guarantee Letter is a critical financial instrument used in commercial transactions where one party (typically a buyer or employer) needs to make advance payments to another party (usually a seller or contractor) but requires security for such payments. This guarantee, governed by Swiss law, provides assurance that the advance payment will be returned if the contracted goods are not delivered or services are not performed as agreed. The document is commonly used in international trade, construction projects, and large equipment procurement, where substantial advance payments are required. It contains specific details about the guaranteed amount, validity period, conditions for claims, and expires either on a fixed date or upon fulfillment of certain conditions. Swiss law provides a particularly strong framework for such guarantees due to its sophisticated banking regulations and well-established commercial law principles.
