Advance Payment Guarantee

An Advance Payment Guarantee is a bank-issued assurance to a buyer, ensuring the return of advance payments if the seller fails to meet contractual obligations.

Banks issue these guarantees to protect buyers. They ensure that advance payments are refunded if sellers do not deliver goods or services as agreed. This type of guarantee is common in international trade and large construction projects.

Examples of significant instances include:

• International trade agreements
• Construction contracts
• Large-scale procurement deals

Banks like HSBC, Citibank, and JPMorgan Chase frequently provide these guarantees.