The principal is an executing organization

At the serious businessman all should workjust like a watch, so various troubles in the relationship with partners can have a negative impact on business. In order to avoid unforeseen circumstances, on the one hand, and on the other hand, companies conclude contracts 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 default and terms of the transaction. This document is a special agreement, in which three parties are involved: the guarantor bank, the beneficiary and the principal. The determination of obligations of each of the parties guarantees their timely execution and avoids force majeure.

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

Such a document allows the customer to be confidentin the performance of all obligations, otherwise the beneficiary will receive a certain amount of money as compensation for the principal's failure to do so. If the terms of the contract are not met through the fault of the contractor, the damages are recovered from his account or a credit line issued in his name. But there are also unpredictable circumstances, in case of occurrence of which insurance is provided.

The principal is a person who is serious abouttheir work and respecting partners, because the bank guarantee itself is a powerful insurance tool that protects both sides from all sorts of risks. This moment is very important in modern business conditions. Very often this document uses the principal in its contractual relations. This allows him to save money, because if this document were not available, more significant funds would be spent (when applying to commercial banks with a request for a loan).

All expenses for bank guarantee executionfall on the shoulders of the executing organization. The applicant, who is also the debtor, turning to the guarantor bank, must comply with all its requirements, otherwise the document may be refused. A credit organization for its mediation receives a certain reward, which the principal pays. This condition is also prescribed in the Civil Code of the Russian Federation.

The only thing is that no order is prescribed by lawpayment of remuneration and its amount, therefore the applicant and the guarantor should settle this issue on their own and prescribe all 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 can not be challenged by the applicant in court.

The guarantor bank is the intermediary between the beneficiary andthe principal. He is not engaged in clarifying the relationship between the parties, but only monitors the strict implementation of the terms of the bank guarantee. He considers in case of conflicts the documents provided by the partners - and makes his verdict.

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