Demand Guarantee

An independent, primary obligation of a bank to pay a specified amount if the specified conditions for payment are satisfied (normally presentation of a written demand for payment by the beneficiary of the demand guarantee together with any other stipulated documents). Distinguishable from a suretyship guarantee in that the guarantor's obligations under a suretyship guarantee are secondary or co-extensive in nature with those of the Principal under the underlying contract. A demand guarantee is similar in effect to a Standby Letter of Credit.

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