Unconditional Payment Guarantee
A promise to pay the beneficiary if the other party fails to meet its obligations. Triggered on first demand following a breach of the repayment contract.
What Is an Unconditional Payment Guarantee?
An Unconditional Payment Guarantee is a promise from a company or an issuer to pay a beneficiary if the other party fails to meet their obligations.
It’s triggered on first demand following a breach of the repayment contract—offering reliable protection in high-value deals.
Why Public & Private Organisations Use It
The beneficiary can call on the guarantee by first written demand, following a breach of the repayment contract, provided the demand meets the guarantee’s terms. It is used between companies and organisations in high-value deals to protect the beneficiary and help the parties agree, create and execute future transactions.
Key Benefits and Use Cases
These guarantees are irrevocable, globally recognised, and separate from the main contract.
They’re widely used in trade, construction, and government contracts to cover advance payments, secure performance, or back bids and tenders.
How an Unconditional Payment Guarantee Works
AGSTEEN provides and executes this guarantee through bankruptcy-remote special purpose vehicles (SPVs). Each guarantee is issued by a dedicated SPV, so its obligations are kept separate from AGSTEEN’s and the parties’ other assets.
Payment guarantee
The beneficiary and the other party agree a repayment contract. AGSTEEN, through a bankruptcy-remote SPV acting as issuer, provides the guarantee in favour of the beneficiary, with its amount and terms stated.
Default
If the other party fails to meet its obligations under the repayment contract, the beneficiary has a claim under the guarantee.
Written demand
The beneficiary presents a written demand to the SPV that meets the guarantee’s terms. This follows a breach of the repayment contract.
Repayment
The SPV is legally obliged to honour a valid payment demand. AGSTEEN arranges the capital required to meet this obligation through its Capital Creation services.
Discover Our Payment Guarantees
Speak with AGSTEEN about an Unconditional Payment Guarantee tailored to your contract terms.