What Is a Performance Bank Guarantee?

A performance bank guarantee provides a secure promise of compensation of a set amount in the event that a seller does not meet delivery terms or other provisions in the contract. The purpose of this sort of guarantee is to solidify the contractual connection between a seller and buyer. In general, a bank guarantee is an irrevocable duty the bank has to give out a predetermined dollar value if the party represented by the bank fails to meet the terms of a contract.