BANK GUARANTEE UNDER 44 FZ. Everything you need to know about bank guarantees for bidding

Start of validity period

The guarantor is signed by the parties to the agreement and begins to act before the contract is executed.

In non-standard credit situations, banks may not specify in contracts circumstances that include the period of validity of a bank guarantee (abbreviated as BG). In the absence of financial security, the bank will lose the opportunity to compensate for losses, since the guarantee obligations have not come into effect.

When contractual obligations begin to take effect later than the signed guarantor, the customer carries out the formalities in advance. Then the period of validity of the BG will begin from the agreed upon moment, and not from the date of signing.

End of action

The duration of its validity depends on the functional significance of the warranty period. The awareness of the beneficiary is of great importance. Legislative projects require adjustments to be made to financial documents that change the expiration date of the fiscal year if:

• documentation was submitted during the warranty period. 2 months must pass from the end of competitive bids for the bank (under Article 45 of Federal Law No. 44);
• a contract was concluded (under Article 96 of Federal Law No. 44). The validity period of the BG must be specified in excess of one month from the date of completion of the work;
• The purpose of the loan is the purchase of machinery and equipment with a special warranty period. This time must be included in the period of bank provision (under Article 43 of Federal Law No. 44). Confirmation must be based on technical documentation.

At the legislative level, minimum periods are established for the expiration of the warranty coverage. But the parties to a financial transaction can extend the guarantee period for the entire duration of cooperation.

The validity of the BG automatically ends after the payment of all funds received by the recipient. The procedure does not depend on the warranty period under the bilateral agreement.

Supplier deadlines

The guarantee document is provided to the customer as insurance against improper actions of the supplier. See the table for how long a bank guarantee is issued in different cases:

Changing the warranty period

According to Federal Law No. 44, the financial contract specifies changes to the warranty period based on the following factors:

• if the validity period of the government contract has changed, and the previously issued BG did not cover the performance period. Then you need to contact the bank for an extension or apply for a guarantor for the missing period;
• when the terms of the contract were fulfilled earlier than the period specified in the documents. Then a reduction in the warranty period is required - the recipient returns all documents to the bank with confirmation of completion of work and purchases;
• if the contract was concluded for several years, the bank may put forward a decision to issue a BG for a year with a mandatory extension. This design is used in irrevocable BG.

Details of registration depending on the period

According to the law, the details of the issuance of BG are not reflected in the contract, but the guarantee period changes the content and procedure for drawing up the contract for operations:

1. A long term increases risks for the bank, resulting in increased requirements for clients.
2. For a long contract period, it is necessary to prepare documentation in advance in order to have time to issue a guarantee. This is due to the lengthening of the procedure for registering a BG.
3. The price of banking services depends on the increase in the guarantee period.

When a contract is issued for 1 year, the basic guarantee is issued in 5 days with a three percent deposit. For 3 years - in 8-10 days at 5% of the deposit.

Procedure and terms for issuing a bank guarantee

44-FZ strictly regulates the deadline for signing the contract by the winning bidder, and therefore the deadline for providing the BG.

If we talk about an auction in electronic form, it lasts 5 days for each party. In this case, the procurement organizer can send a draft contract within 5 days, i.e. both on the 1st and 2nd day after the publication of the protocol for summing up the results of the auction, thereby reducing the period for signing the contract.

That is why interim measures for government orders are usually issued using the express method and the total release time is 2-5 working days:

1. Review within 1-2 days from the date of provision of all documentation.
2. Issue within 1 day on the day the commission is credited.
3. Entering into the register within 1 day after the scan is released.

Review period

The procedure for obtaining a banking project consists of studying and signing documents. The review period includes operations:

1. Decor. It is done in two versions: written or electronic. The customer undertakes to review the submitted application within 3 working days.
2. In case of refusal to accept, the bank will notify you within 3 days from the start of consideration
3. The participant accepts and forwards documentary evidence of the trading transaction through the electronic auction platform.
4. In the event of a competition, the original documents are transferred to the customer. Before signing the contract, the customer should check the availability of all information about the document in the UIS Register.

BG register

Until July 1, 2018, the BG register operated in open mode and anyone could familiarize themselves with it on the website of the Unified Information System (UIS). But after July 1, open access to the EIS is closed according to the new rules of PP No. 1005. From now on, information is available only to customers and bank representatives.

The following information is entered into the BG Register (Part 9 of Article 45 of 44-FZ):

• name, TIN and address of the bank that issued the document;
• name, TIN and address of the BG applicant;
• the amount that the guarantor will be obliged to transfer to the beneficiary if the supplier fails to fulfill the terms of the contract (or in case of refusal to conclude the contract);
• validity period of the BG;
• a copy of the guarantee, except for those documents, information about which is included in the closed register of the BG;
• other documents according to the list of Decree of the Government of the Russian Federation dated November 8, 2013 No. 1005.

The institution issuing a guarantee as an OIC, within 1 business day following the day of issue of the BG, is obliged to send information to the register (or closed register) of the BG, based on the rules and procedure for its maintenance. Then, within 1 working day after entering this information into the register, the bank draws up an extract from the register of bank guarantees and transfers it to the applicant.

Revocation of warranty

The list of mandatory contents includes the right to revoke the guarantee. It can be revoked by the guarantor. In the absence of this clause (according to Article 371 of the Civil Code), the bank does not have the right to withdraw.

The revocation may be replaced by a reduction in the security period. This right is discussed in Article 188.1 of the Civil Code. The termination of obligations occurs:

• if all conditions are met;
• in case of abuse of power.

All cases of termination must be documented. In case of abuse, all problems are resolved through the court, only its decision will give the right to recall. If an irrevocable guarantee was originally drawn up, the financial institution will not be able to close the security.

A review can be replaced with a re-confidence. In this case, the principal is not able to complete the work for the reasons discussed in Article 187 of the Civil Code:

• legal illiteracy of the applicant;
• The BG is issued by the creditor taking into account its own interests;
• The principal defends his interests independently.

To prevent complications, intermediaries are involved, with whom the bank and the client can coordinate requirements.

Types of BG

The BG is issued both as security for the application and as an OIC. The second case is most common in the field of public procurement.

One of the key conditions for concluding a contract is the irrevocability of the guarantee under 44-FZ . This means that the financial institution that issued the document does not have the right to revoke the guarantee at its discretion and undertakes to fulfill all obligations assumed.

Currently, all bank accounts meet this condition, so banks take a serious approach to checking all financial indicators of the principal. Because if it turns out to be unreliable, then the bank will not be able to avoid paying the “penalty” to the customer.

Normative base

The concept of a bank guarantee is regulated by the legislative framework in accordance with Federal Law No. 44 and the Civil Code.

Article 190 Civil Code

The article examines the right to indicate a period in a BG agreement as a mandatory condition. The indication is made in the form of an exact calendar date or time period, which is calculated in the number of days.

If this period is not specified, the guarantor has the right to file a claim to invalidate the guarantee.

Article 44 Federal Law

Participation in the competition obliges the customer to indicate the availability of financial security. If the winner refuses to sign the contract, this will entail measures to prevent further participation. In this case, losses can be compensated through BG. The article indicates that the interests of the organizers are respected for a minimum period (about two months after the date of completion of the selection).

Article 96 Federal Law

The conclusion of an agreement with the principal obliges the recipient of funds to verify the bank’s bona fide intentions. The BG procedure consists of timely provision of payment for losses in the amount limited by the terms of the contract. The validity period of this type is at least one month from the date of completion of the contract.

Article 43 Federal Law

For the supply of goods, technical means are required, which, according to the documentation, have a clearly defined warranty period. In this case, the duration of the bank collateral must include the guarantee period from the technical documents. If there are no such instructions, then the security should be determined in accordance with Article 96 of Federal Law No. 44.

The principal himself must monitor the deadlines; he is responsible for the legality of the guarantee used as security for his obligations. Discrepancies with the norms of the law on the first day of the contract cancel the efforts of the principal to provide an eligible document of benefit.

Regulatory regulation

Article 45 of 44-FZ specifies all the requirements for the BG, and Article 96 of the same law specifies the conditions for security.

In these legal norms you can find almost all the answers to the questions that have arisen regarding the provision of BG as security for the execution of a government contract.

An important document regulating the requirements for the text of the guarantee is Government Decree No. 1005 of November 8, 2013 “On bank guarantees used for the purposes of the Federal Law “On the contract system in the field of procurement of goods, works, services to meet state and municipal needs.”

Nuances

What to do if the bank guarantee period is violated

If the term of the BG is violated, then it is difficult to restore it with the help of the court. The agreement itself allows for situations in which the functioning of the transaction period changes if the specified condition suits both the guarantor, the principal, and the beneficiary.

If the deadline is violated, then there are two response options.

1. Extension – when such an opportunity is secured based on the terms of the transaction;
2. Termination of obligations - when nothing is specified in the contract.

What to do if the contract does not specify the period of the bank guarantee

A mandatory condition in the contract is an indication of the warranty period. In the absence of this record, the transaction is considered not concluded. If the parties do not agree on the period of validity of the contract and its security, then the document is legally invalid. A credit institution is not legally obligated to pay funds to the recipient, but the debtor himself may not pay the bank.

It is unacceptable to indicate in the agreement the wording: “Until full fulfillment of obligations” instead of the exact date. The period of validity of the guarantor must be specified. Then it is considered fulfilled on the basis that the bank gave guarantees.

Can the validity period of a bank guarantee be less than the contract period?

Guarantees do not cover the entire period of the relationship between the financial parties. There are civil law rules that establish restrictions on this situation and allow it in a transaction between the parties. However, some of the obligations are not guaranteed.

The influence of the deadline on the circumstances of registration and cost

To reduce risks, financial institutions perform step-by-step operations with the product. For example, the release of new products throughout the entire period of work, and for each subsequent period of release a condition for re-registration is prescribed.