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FP6 Financial Info & FAQs --> Contract Negotiation --> Financial Guarentees --> Financial Guarantee FAQs

Q:

We have a partner who was asked to provide a Bank Guarantee. The partner provided a Bank Guarantee in Dollars and has been told to re-issue the bank guarantee in EURO. The partner is only a small participant and cost of providing the Guarantee is very high, would a Bank Guarantee in Dollars not suffice?

A:

The EU’s is concerned to guard against currency fluctuation. The advance funding, against which the guarantee is being given, is in Euro and therefore if any claim (hopefully unlikely) is made then it will also be in Euro. A dollar bank guarantee is dollar linked and may be more or less than the Euro value. We are surprised that this was not clear at the time of signing the contract, and we are fairly sure that the EU requested the guarantee as X amount of Euros. It is unlikely that they will accept anything different. You should discuss the matter with the PO.



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