Bid bond | Also known as a tender guarantee, the bid bond is requested by the tenderer to ensure that bidders do not withdraw or alter their tenders before adjudication and that they will accept and sign the contract if awarded. |
Performance | Assures payment in the event that contractors do not fulfil their contractual obligations as specified in the underlying contract. |
Advance payment | With most major contracts, the exporter or contractor negotiates for an advance payment in order to be able to finance the transaction. The importer or employer will require an advance payment guarantee thus assuring refund of the down payment in the event of non-execution. |
Payment | Payment guarantees are used as security for payment obligations such as those usually occurring in connection with a contract of sale, takeover, lease, construction contract, loans, bond issues, etc. They are often used to cover open account terms that provide 30, 60 or 90 days’ credit. |
Demand | The demand guarantee incorporates various simple payment guarantees which may be claimed upon default of a predefined agreement. Five demand guarantees are currently available: Waste Mgt Strategy; Comptroller of Customs; Commissioner of VAT; Director Malta Transport Authority; Other Beneficiaries. |
Customs | Payment of Excise Duties and VAT can be avoided by an undertaking to re-export goods or equipment backed by a Customs Guarantee. The tax exemption is withdrawn and the guarantee can be called in if the goods have not left the country by the end of the expected period of use. This instrument can also be used for goods stored in bonded warehouses and subsequently sold on the local market. |
MEPA | A standard guarantee requested by the Malta Environment & Planning Authority (MEPA) in order to ensure that the applicant adheres to the terms and conditions as specified in the permit. |
Partial payment | Partial payment guarantees are similar to payment guarantees but incorporate a reducing clause which states that the guarantee amount is reduced by the amount paid. |
Credit facility | This type of guarantee covers the banking facilities granted to a BOV customer, or to a third party by another bank. A claim is lodged if the borrower defaults on repayment of loans/overdrafts. |
Judicial award | Judicial guarantees are issued in favour of a creditor in order to discharge a conservatory attachment order. These guarantees are payable by submission of the final court judgment, that is, 90 days after court judgment, and therefore do not have a fixed expiry date. |
Appeal cost | This guarantee is requested by the court prior to initialisation of an appeal and covers all costs related to the appeal. Like the judicial award guarantee, there is no fixed expiry date and the guarantee automatically expires six months from the appeal judgment. |
Foreign banks | Foreign guarantees are used when the beneficiary is a foreigner. The intervention of the foreign bank, normally provided by the beneficiary as a swift message MT760, is processed in two ways:Issue: The foreign bank authenticates the BOV message and passes it on without any responsibility on their part.Request: BOV requests the foreign bank to issue the guarantee for the account of the applicant against which BOV then covers the foreign bank with a counter-guarantee. |
BOV legal office approval | If the requested guarantee wording is not standard, BOV legal office approval is sought and approval or amendment of the wording is effected as required. |
