Introduction

A written document issued by Bank of China at the request of the tenderee for bids of construction and procurement of project, committing that the tenderer will not withdraw or amend its bid during the validity period of the bid, and will sign the contract or submit performance guarantee within the preset time once winning the bid.

Functions

Solve the problem of mutual mistrust between the tenderee and tenderer with bank credit to realize smooth tender offer; replace cash margin by the tender guarantee/bid bond to reduce the financial pressure of the bidders.

Features

1. Solve the problem of mutual mistrust between both parties of a transaction. With good reputation, Bank of China involves in the transaction and acts as a guarantor to promote smooth transaction by providing guarantee for the parties;

2. Reduce the financial pressure. As an alternative to cash margin, it can reduce tied up fund of the tenderer;

3. Indemnify the damaged party and penalize the defaulting party in case of breach of contract to avoid and reduce contract breaching activities, thus saving trouble and expenses arising from litigation or arbitration.

Charges

The tender guarantee/bid bond fees should be charged based on the principles and rates determined in accordance with relevant rules of Bank of China; the fees for letter of guarantee in foreign currency shall be charged in the same way as for letter of guarantee in RMB.

Target Customers

1. Contractors involved in contracted projects;

2. Suppliers involved in material procurement projects.

Application Qualifications

1. The applicant shall hold a business license of legal person that has passed the annual inspection or other valid certificates which fully prove its legal operation and scope of business;

2. The applicant shall have a loan card;

3. The applicant shall have an account opening permit and open a settlement account with Bank of China;

4. The applicant shall have the qualification to engage in relevant business (such as qualification of contracting foreign projects, construction qualification of building enterprise, etc.);

5. The applicant shall have a credit line at Bank of China, or pay full margin, or full guarantee acceptable to Bank of China.

Process

I. Application for letter of guarantee

1. The applicant fills out an application form or a contract for issuance of a letter of guarantee;

2. The applicant pays margin or submits other counter guarantee;

3. The applicant submits primary documents related to the contract;

4. The applicant submits other documents necessary for issuance of a letter of guarantee as required by Bank of China.

II. Examination and issuance of letter of guarantee

1. Bank of China examines the customer qualification, underlying transaction and relevant documents;

2. Bank of China confirms the customer's margin or credit line and other mortgages;

3. Bank of China examines the written application and form of the letter of guarantee;

4. Bank of China issues the letter of guarantee.

Kind Reminder

1. Amendment to letter of guarantee: The clauses of the letter of guarantee can be amended on request of the guaranteed party and the beneficiary, such as extension of the validity period.

2. Payment/compensation against letter of guarantee: In case the beneficiary claims compensation within the validity period of the guarantee, the applicant should be notified in time. The payment should be made after the guaranteeing bank examines the claim documents and confirms the documents are in compliance with the claim clauses of the guarantee.