 |
When
the Importer awards the contract he or she will require a Performance Bond -
(in some cases this will replace an existing Bid Bond). |
 |
The
Exporter signs the contract with the Importer and indicates that the
Performance Bond will follow. |
 |
The
Exporter requests issuance of the Performance Bond from his or her bank - (in
some cases this may be contingent on release of the Bid Bond). |
 |
The
Performance Bond is usually a higher amount than the Bid Bond. The Exporter's
bank checks the creditworthiness of the Exporter and agrees to issue the
bond. |
 |
The
Exporter's bank issues the Performance Bond direct to the Importer, if
acceptable. |
 |
The
Exporter's bank uses the service of the Importer's local bank to: |
|
a)
Advise the Exporter's bank Bond to the Importer. |
|
b)
Issue the local bank's own Bond to the Importer. |
 |
The
Importer receives: |
|
a)
Advice of the Exporter's bank Bond i.e. is dependent on Exporter's bank to
pay. |
|
b)
Advice of local bank's Bond i.e. is dependent on own local bank to
pay. |
