What are Application Dossiers to Apply for Bank Guarantee?

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.

Bank Guarantee in Vietnam

Guarantee commitment is the written document issued by the guarantor or the counter-guarantee issuing party or the guarantee-confirmation issuing party.

According to Vietnam Law on Credit Institution, and Circular 07/2015/TT-NHNN, the application dossiers for bank guarantee are:

a) Written request for guarantee;

b) Materials related to customers;

c) Materials on guaranteed obligations;

d) Materials on security (if any);

dd) Materials related to other parties (if any).

Read More

What are Rights and Obligations of the Obligee?

The rights and obligations of the obligee are as following:

Rights of the obligee:

a) Request the guarantor, the guarantee-confirmation issuing party to fulfill guarantee obligations;

b) Request the guarantor, the guarantee-confirmation issuing party to fulfill obligations and liabilities agreed upon in the guarantee commitment;

BankingLawyer in Vietnam

c) File a lawsuit in accordance with laws if the guarantor or the guarantee-confirmation issuing party is in breach of their agreed-upon obligations;

d) Check the authenticity of the guarantee commitment;

dd) Transfer their rights and obligations to other entities under the agreement between involved parties in conformity with legal regulations;

e) Exempt the guarantor, the guarantee-confirmation issuing party from liability to fulfill guarantee obligations;

g) Exercise other rights under the agreement between parties in conformity with legal regulations.

Obligations of the obligee

a) Fulfill agreed-upon guarantee obligations and ensure conformity with terms and conditions set in the guarantee commitment;

b) Notify the guarantor, the guarantee-confirmation issuing party and other related parties of any sign or act of violation committed by the obligor;

c) Fulfill other obligations under the agreement between parties in conformity with legal regulations.

Read More

What Must Be Included in the Bank Guarantee Letter?

The guarantee commitment must include the following contents:

a) Applicable regulations;

b) Serial numbers and guarantee commitment form;

c) Information about parties in the guarantee relationship;

Banking Lawyer in Vietnam

d) Date of guarantee issuance, guarantee validity commencement and/or cases in which the guarantee validity begins;

dd) Date of validity termination and/or cases in which the guarantee validity is terminated;

e) Guarantee sum and currency;

g) Guarantee obligations;

h) Conditions for fulfillment of guarantee obligations;

i) Application for fulfillment of guarantee obligations;

k) How to check the authenticity of the guarantee commitment.

In Vietnam, there are banks whom only issue one original bank guarantee letter however the number of originals are not regulated in Vietnam laws.  It is also important to ensure the person whom sign the bank guarantee letter is legal representative or the authorized person whom is legally authorized to sign the bank guarantee letter.

Read More

What is Bank Guarantee Letter?

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.

Bank Guarantee in Vietnam

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.

Read More