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Trading Terms

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Demand guarantee

A guarantee usually issued by a bank, under which the beneficiary is only required to make a demand in order to receive payment. In contrast to the conditional or suretyship guarantee - which require the beneficiary to provide proof of the principals default, a demand guarantee only requires that the beneficiary make a simple demand, and therefore this latter type of guarantee is relatively risky in terms of exposure to an unjustified demand on the part of the beneficiary.

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