The principal is an executing organization

For a serious entrepreneur, everything should work.just like a watch, so various troubles in relationships with partners can adversely affect business. In order to avoid unforeseen circumstances, both on the one hand and on the other hand, companies enter into agreements of various forms among themselves, depending on what is the subject of the agreement.

Recently, more and more entrepreneursresort to a bank guarantee to protect themselves and their partner from non-compliance with the obligations and conditions of the transaction. This document is a special agreement in which three parties are involved: the guarantor bank, the beneficiary and the principal. The definition of the obligations of each of the parties ensures their timely implementation and avoids force majeure.

The principal is the applicant, or the person actingthe initiator of the contract. The bank guarantee is signed on the one hand by the bank and the contractor, and on the other by the customer, also called the beneficiary. This document guarantees the fulfillment of certain obligations by one party in relation to the other. A principal in a bank guarantee is an organization that has applied to a financial institution with a request to conclude an agreement.

Such a document allows the customer to be confident.in fulfilling all obligations, otherwise the beneficiary will receive a certain sum of money as compensation for the agreement not fulfilled by the principal. If the terms of the contract are not met due to the contractor’s fault, then damages are paid from his account or credit line drawn up in his name. But there are also unpredictable circumstances, in case of occurrence of which insurance is provided.

A principal is a person who is serious aboutto their work and respecting partners, because the bank guarantee itself is a powerful insurance tool that protects both parties from all kinds of risks. This moment is very important in the modern business environment. Very often this document is used by the principal in its contractual relationship. This allows him to save a great deal, because, if this document had not been done, more significant funds would have been spent (when applying to commercial banks for a loan).

All expenses when issuing a bank guaranteefall on the shoulders of the implementing organization. The applicant, who is a debtor, applying to the guarantor bank, must meet all his requirements, otherwise the issuance of the document may be refused. The credit organization for its mediation receives a certain remuneration paid by the principal. This condition is also spelled out in the Civil Code of the Russian Federation.

The only thing that is not prescribed by lawpayment of remuneration and its size, so the applicant and the guarantor must settle this issue on their own and prescribe all the conditions in the bank guarantee. Even if there is no clause in the contract describing the amount of commission payments, the document is still considered valid and cannot be challenged by the applicant in court.

The guarantor bank is an intermediary between the beneficiary andthe principal. He is not engaged in clarifying the relationship between the parties, but only ensures that the conditions of the bank guarantee are strictly observed. Considers documents provided by partners in the event of conflicts - and issues its verdict.