Under a guarantee payable on demand, the bank will typically pay against a declaration of breach of contract or default, whereas under a conditional guarantee or guarantee payable on agreement, the bank will wait for an agreement between the parties or a court decision before paying.

What is a bid bond and what is a performance bond - and why must they be issued?
A bid bond must normally be issued when an exporter makes a bid under an invitation to submit tenders - as security for the exporter's bid obligations.

A performance bond covers the compensation to be paid if the exporter does not fulfil his contractual obligations.

What is the difference between a direct guarantee and a counter-guarantee?
The direct guarantee is issued by Danske Bank and sent direct to the beneficiary or sent via his bank. In contrast, if Danske Bank asks a foreign bank to issue a guarantee on our behalf, Danske Bank issues a counter-guarantee as security.

If Danske Bank issues a counter-guarantee, it means as a rule that there are more expenses connected to the issue of the guarantee than to an issue of a direct guarantee, as we are actually talking about two guarantees. Furthermore, the guarantee will not be subject to Danish law, which for example can mean that an expiry date might not be respected.

What is the difference between guarantees with and without an expiry date?
If a guarantee is issued with an expiry date, it means that the guarantee is no longer valid after this date. This is, however, provided that the expiry date is given as a calendar date and not as, for example, 18 months after transfer.

On the other hand, if there is no expiry date in the guarantee, the guarantee can be cancelled only when either the original guarantee is returned to Danske Bank or we receive notice that we are released from our obligations.

Can Danske Bank confirm a guarantee issued by a foreign bank?
Yes, as long as the issuing bank requests that we do so and we are able to approve the bank as well as the content of the guarantee.