What is an independent warranty?

, also known as a guarantee of demand, is an independent guarantee of the type of financial arrangement, which ensures or guarantees that the recipient or obligation can receive payment on request; This type of warranty is usually included in the sale of performance bond, as well as other types of financial measures. Usually, the ability to require payment is based on the failure of the other party in the agreement to fulfill certain obligations related to the agreement, which provides the obligation to require payment and to settle the contract before the originally proposed due date.

The general function of an independent warranty is to ensure that the interests of the obligation to be protected in various types of financial measures and provide a certain type of compensation if the other party in the contract of its obligations. The warranty is often in the form of a executive bond that is issued to the obliged person and can be submitted for payment if the issuerHe cannot honor the wine. In this way, it is obliged to at least partially compensated for any losses that are likely to occur as a result of the inability of the other party to promise.

One of the simplest ways to understand how the independent warranty function is to consider the sale of a round number of carpets by the importer exporter. Within the agreement, the importer may require the exporter to obtain a formal bill from the bank and state that if the exporter fails to deliver the carpets in time and in the right quantity, the importer will receive a certain amount of compensation. The note is handed over to the importer who holds it until the carpet and the carpet is finished. If the exporter fails to make delivery in time or the quantity is reduced, the importer may be an obligation in the agreement to present a note for the payment of the bank. The bank will honor the payment and then deduct the amount of this payment from the exporter's accounts.

The purpose of independent warranty is to protect the interests of duties in casee The debtor cannot honor the obligations made within the trade agreement. Although the amount of warranty is unlikely to provide total compensation for failure, it makes at least partially compensated losses suffered by the obliged person, either because of the lost opportunities for the sale of goods or expenditure arising from the waiting for the other side to fulfill its contractual obligations. Together with the protection of the interests of the obligation, the use of independent warranty also provides further motivation for this other side to comply with the terms of the contract so that it is never performed.