Guarantee Contract
As per Article 686 of Civil Law, guarantee contract means that a person guarantees an obligation already undertaken by another person. In banking terminology, a written instrument of guarantee contract between guarantor (bank) and beneficiary is called a bank guarantee.

Types of Common Guarantees
Tender, good performance, advance payment, retention money, and customs. In this regard, Bank Tejarat issues above guarantees against a valid security.

1- Required documents for foreign exchange guarantees for export of produced (industrial, agricultural, mineral, … ) goods

- An approval issued by concerned ministry certifying that applicant has potential to execute contract or object of tender.
- Guarantee Specification Form on company’s letterhead as signed by company’s signatories and approved by bank branch (applicant’s name, beneficiary’s name, correspondent bank’s name, guarantee value, currency, percentage of guarantee in proportion to total contract value, type, object and expiry date).
- Guarantee Issuance Application Form as filled in on company’s letterhead and signed by company signatories and approved by bank branch.
- Copy of tender or contract documents or advised export letter of credit as approved by foreign exchange division of related bank branch.
- Letters of Undertaking required for issue of guarantee.
- Securities of such guarantees shall be determined by credit organs of bank within the limitations of issuance of guarantees and endorsement on behalf of banks.
Commission is calculated based on rates determined by Central Bank of The Islamic Republic of Iran.

2- Documents required for foreign exchange guarantees for export of technical and engineering services

- Approval issued by State Management and Planning Organization as to applicant’s qualification stating guarantee ceiling for tender guarantee.
- Approval related to rules and regulations and by-laws for government’s support for export of technical and engineering services containing guarantee ceiling, amount of foreign exchange obligation of contract and period for settlement thereof in the case of performance guarantees and advance payment guarantee.
- Copy of tender or contract documents or Advice of Works as per case.
- Cancellation of tender guarantee (in case of waiver of tender formalities by beneficiary)
- Guarantee Specification Form on company’s letterhead as signed by company’s signatories and approved by bank branch Guarantee Issuance Application Form as filled in on company’s letterhead and signed by company signatories and approved by bank branch.
- Guarantee Issuance Application Form as filled in on company’s letterhead and signed by company signatories and approved by bank branch.
- Letters of Undertaking required for issue of guarantee.
- Securities of such guarantees shall be determined by credit organs of bank within the limitations of issuance of guarantees and endorsement on behalf of banks.

3- Import Guarantees with Counter-guarantee by Foreign Banks

1- Rial Guarantees
Such guarantees are issued for clearance of temporary importation of machinery used by foreign contractors in the form of customs guarantees or undertaking for payment of insurance premium or tax of foreign companies subject to state taxation law or guaranteeing Rial contracts.

2- Foreign Exchange Guarantees
Such guarantees are usually issued in the case of foreign exchange contracts, buying goods or services from foreign companies and customers and Bank Tejarat issues such guarantees in favor of Iranian companies (buyers and employers) against counter guarantee of good-standing foreign banks.

In this regard, it should be noted that to lessen expenses, some Iranian companies accept directly guarantees issued by foreign banks and institutes in their favor and since they are not experienced in banking operations, they would have so many problems at the time of collection of their money or extension of expiry dates of such guarantees. Hence, Central Bank of The Islamic Republic of Iran has forbidden acceptance, approval, and advice of any direct guarantees issued by foreign banks and institutes to Iranian beneficiaries (except in certain cases by obtaining permission).

Other Services by Guarantees Issued

1. For the time being, guarantees for securing repayment of facilities and credits granted by Islamic Development Bank (IDB) to Iranian Companies shall be issued in the shortest time upon approval of Central Bank of The Islamic Republic of Iran

2. Bank Tejarat provide services after issue of above guarantee including increase or decrease of guarantee amount, extension and cancellation of guarantee in the prompt time.

3. Rial facilities are granted in the form of Islamic Contracts to representatives and agencies of foreign clients against guarantee of good-standing banks.