The principal is an executing organization

In a serious entrepreneur, everything should work just like a clock, so various troubles in relationships with partners can have a negative impact on business. In order to avoid unforeseen circumstances, on the one hand, and on the other hand, the companies conclude contracts of various forms among themselves, depending on what is the subject of the agreement.

Recently, more and more entrepreneurs have resorted 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 the obligations of each of the parties guarantees their timely execution and avoids force majeure.

The principal is the applicant, or the person who initiates the conclusion of the contract. The bank guarantee is signed by the bank and the executor on one side, and on the other - the customer, who is also called the beneficiary. This document guarantees 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 the request to conclude a contract.

Such a document allows the customer to be sure of the fulfillment of all obligations, otherwise the beneficiary will receive a certain amount of money as compensation for the agreement not fulfilled by the principal. If the terms of the contract are not met through the fault of the contractor, the damages are recovered from his account or 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 about his work and respects partners, because the bank guarantee is in itself a powerful insurance tool that protects both sides from all sorts of risks. This moment is very important in today's business environment. Very often this document uses the principal in its contractual relations. This allows him to save money, because, if this document would not have been spent, more money would be spent (when applying to commercial banks with a request for a loan).

All costs for the preparation of a bank guarantee fall 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 that the law does not prescribe the procedure for payment of remuneration and its size, therefore the applicant and the guarantor should 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 can not be challenged by the applicant in court.

The guarantor bank is the intermediary between the beneficiary and the 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. It considers in case of conflicts the documents provided by partners - and makes its verdict.