An advance payment guarantee is a commitment for the beneficiary of the guarantee (mainly the buyer) that it will be able to claim back a part of the advance of money they have paid to the contractor in case of non-performance or incomplete performance of the contract.
An advance payment guarantee consists of an on-demand bond, which means that the contractor pays the amount of money set out in the bond immediately on demand of the beneficiary, without any preconditions having to be met.
An Advance Payment Guarantee is issued by a bank and protects the buyer when an advance or progress payment is made to the contractor prior to completion of the project. The bond undertake that the supplyer will refund any advance payments that have been made to the beneficiary in the event that the product or service doesn't meet the buyer demand as agreed in a contract.
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