Advance payment guarantees in construction contracts

Parties to a construction contract usually agree to the inclusion of separate financial arrangements with third parties for the purposes of ensuring financial security and project success. Parties to a construction contract usually agree to the inclusion of separate financial arrangements with third parties for the purposes of ensuring financial security and project success. One such arrangement is requiring an advance payment guarantee. This guarantee, typically issued by a bank or insurer for and on behalf of the Contractor, offers a safety net to the Employer where it has agreed to provide the Contractor with an advance payment under the contract. Join Zodwa Malinga and Iva Babayi from our Construction & Engineering sector, where they discuss the purpose of advance payment guarantees, the parties to the guarantee, and what the parties should consider in the advance payment guarantee.