Advance payment bond
An advance payment bond is used to secure the refund of an advance payment to the buyer in the event of a delivery being defective or not being made at all, for example because of insolvency. The buyer insists that the seller signs the guarantee, which comes into effect when the seller receives the advance payment. The amount guaranteed is the equivalent of the advance payment, i.e. often between 10 to 30 percent of the cost of the order.
