What does a deficiency performance guarantee mean and what is a deficiency guarantee

The shortfall performance guarantee is actually the payment of the shortfall bond to ensure that both parties fully fulfill their contractual obligations.

The difference margin refers to the funds agreed between the tenderer and the winning bidder and paid by the winning bidder according to the difference between the winning bid price and the maximum price as the guarantee of the full performance of the contract obligations in order to prevent the risk brought by the bidder from maliciously winning the bid at a low price to the investment project.

Extended Resources:

Margin refers to the deposits of various margin properties that are used to account for deposits in banks and other financial institutions.

In the context of the lack of clear regulation of the law for security deposits, it is necessary to define the types of security deposits, such as the type of security deposit, the deposit type of advance payment, the lease deposit, the decoration deposit, the deposit type of deposit, the security deposit with the right to claim return, and the security deposit without double return effect.

The self-provision required by the investor when purchasing in the market financing.

Performance bond refers to the funds agreed between the tenderer and the winning bidder and paid by the winning bidder according to a certain proportion of the winning bid amount to ensure the full performance of the contract obligations in order to ensure the implementation of the construction project.

The specific amount of the performance bond is determined at a rate of 5-10% of the winning bid price.

The specific amount of margin is determined by the difference between the maximum limit price and the winning price. The total amount of the performance bond and the difference bond payable for each specific project shall be specified in the bidding documents.

After the completion of the project, if the winning bidder does not breach the contract, the winning bidder shall apply for the return of all the security deposits with the completion acceptance documents, and go through the procedures for returning the security deposits.

General Principles of the Civil Law of the People's Republic of China [19860412] Article 89 In accordance with the provisions of the law or in accordance with the agreement of the parties, the following methods may be used to guarantee the performance of debts:

1.If the guarantor guarantees to the creditor that the debtor will perform the debt, and the debtor fails to perform the debt, the guarantor shall perform or bear joint and several liability in accordance with the agreement; The guarantor has the right to recover from the debtor after performing the debt.

2.The debtor or a third party may provide a certain amount of property as collateral. If the debtor fails to perform its debts, the creditor shall have the right to be repaid in priority in accordance with the provisions of the law at a discount of the collateral or the price of the sale of the collateral.

3.One of the parties may pay a deposit to the other party within the scope prescribed by law. After the debtor performs the debt, the deposit shall be offset against the price or recovered.

If the party who pays the deposit fails to perform its debts, it has no right to demand the return of the deposit; If the party receiving the deposit fails to perform its debts, it shall return double the deposit.

4.If one party takes possession of the property of the other party in accordance with the contract, and the other party fails to pay the amount payable in accordance with the contract for more than the agreed period, the person in possession has the right to retain the property, and in accordance with the provisions of the law, the retained property is discounted or the price of the property is sold.

**Upper Limit - Winning Bid** = Difference Guarantee Price.

This is also Party A.

There are generally two ways to require the construction party to issue a letter of guarantee: 1. A cash letter of guarantee is required. 2. Bank guarantee.

There are also two ways to handle the bank guarantee, 1 is a small amount you can go to the bank to make a full deposit.

Handle the letter of guarantee, 2 large amounts can find a guarantee company, give them information to help you handle, the first level can be exempted from insurance, the second level may have to collect part of the deposit, relative to the provincial deposit).

Hope it helps.

As part of the performance guarantee, the shortfall guarantee refers to the guarantee that the construction contractor will perform its obligations under the construction contract, and once the contractor fails to perform the corresponding obligations as required by the contract and the employer incurs losses, the guarantor will bear the liability for substitution up to the amount of the guarantee.

Guarantee refers to the legal system in which the parties realize the rights of the creditor in order to promote the debtor's performance of the debt in accordance with the provisions of the law or the agreement between the parties. The guarantee is usually a guarantee contract between the parties. Guarantee activities shall follow the principles of equality, voluntariness, fairness, and good faith.

In terms of engineering, if there is a difference between the cost price calculated by the employer and the employer, the contractor shall pay the difference guarantee before the contract is signed, and once the contractor cannot carry out the project due to **, the employer will continue to complete the contract with the contractor's guarantee as the project payment, and if the above situation does not occur, the employer shall refund the difference guarantee to the contractor within the agreed number of days after the contract period.

The difference between the difference compensation and the guarantee is mainly reflected in: 1. The difference compensation is generally used as a safeguard measure in the transaction process. 2. The difference between the difference compensation agreement and the joint and several liability guarantee agreement is mainly the difference in liability (the amount of liability is different) between the two.

3. Guarantee: As a means to ensure that the debt can be paid off when the debt is not performed, it is necessary to provide the guarantee to the debtor in advance (it is a legal system that can prompt the debtor to perform the debt in order to realize some rights of the creditor).

Extended information: 1. The emergence of the debt guarantee system is a way of economic and legal interaction. Strengthening the credit of debts, facilitating financial integration, and giving full play to the utility of goods are the direct motives for the emergence and development of the debt guarantee system.

The continuous development of the economy has led to the increasing diversification of the legislative value of the guarantee system, the increasing diversification of the ways and types of guarantees, and the need for further improvement and improvement of China's guarantee system in order to meet the objective needs of the development of the guarantee system.

2. Gap top-up is generally considered to be a credit enhancement measure, which is used to protect the investor's principal and income or protect the investor's entire private placement** income. Across the board, this is often used as a credit enhancement measure to protect investors' principal and earnings, or to protect investment income from private equity**. However, in practice, there are many controversies regarding the difference compensation.

Some believe that the deficiency payment is essentially a guarantee, some consider it to be joint and several debts, some consider it to be a gift, and still others believe that it is an independent contractual obligation.

The biggest difference between the guarantee and the shortfall is the amount. The shortfall make-up, as the name suggests, only bears the responsibility of supplementing the difference, and if the guarantee does not have a clear agreed scope, it needs to bear all the responsibilities. Deficiency top-up, also known as deficiency payment, is generally used as a safeguard in transactions.

Guarantee refers to the legal system in which the parties realize the rights of creditors in order to promote the debtor's performance of debts in accordance with the provisions of the law or the agreement of both parties. The guarantee is usually a guarantee contract between the parties. Guarantee activities shall follow the principles of equality, voluntariness, fairness, and good faith.

A security contract refers to an agreement formed through negotiation between the creditor (who is also the guarantor) and the debtor, or between the creditor, the debtor and a third party (i.e., the guarantor) in order to prompt the debtor to perform its obligations and ensure that the creditor's claims can be realized, and to ensure that the creditor's claims can be realized in a certain way when the debtor fails to perform or is unable to perform the obligations.

Legal basis] Civil Code of the People's Republic of China

Article 681:A guarantee contract is a contract in which the guarantor and the creditor agree that the guarantor will perform the debt or assume responsibility when the debtor fails to perform the due debt or when the circumstances agreed upon by the parties occur.

Legal analysis: If a party other than a trust contract provides a third-party shortfall compensation, performance of repurchase obligations at maturity, liquidity support, and other similar commitments as credit enhancement measures, and its content complies with the provisions of the law on guarantees, the people's court shall determine that a guarantee contractual relationship has been established between the parties. Where the content does not conform to the provisions of the law on guarantees, the corresponding rights and obligations are to be determined on the basis of the specific content of the commitment document, and the corresponding civil liability is to be determined on the basis of the facts and circumstances of the case.

At the same time, according to the minutes, if the company's external guarantee fails to perform the corresponding decision-making procedures of the shareholders' (general meeting) and the board of directors, it may be invalid because the legal representative exceeds his authority and the counterparty is not in good faith. Therefore, the determination of the deficiency top-up as a guarantee or non-guarantee has a significant impact on its effectiveness.

Legal basis] Civil Code of the People's Republic of China

Article 386:The holder of the security interest shall enjoy the right to be repaid in priority in respect of the secured property in accordance with law in the event that the debtor fails to perform the debts due or the parties agree to realize the security interest, except as otherwise provided by law.

Article 387:Where a creditor needs security in order to ensure the realization of its creditor's rights in civil activities such as lending or trading, it may create a security interest in accordance with the provisions of this Law and other laws.

Where a third party provides security to the creditor for the debtor, it may be referred to as requiring the debtor to provide a counter-guarantee. Counter-guarantees shall be governed by the provisions of this Law and other laws.

Article 388:To establish a security interest, a security contract shall be concluded in accordance with the provisions of this Law and other laws. Guarantee contracts include mortgage contracts, pledge contracts and other contracts with security functions. The guarantee contract is a subordinate contract of the main creditor's rights and debts.

If the principal creditor's rights and debts contract is invalid, the guarantee contract shall be invalid, except as otherwise provided by law.

If the debtor, guarantor, or creditor are at fault after the guarantee contract is confirmed to be invalid, they shall each bear the corresponding civil liability according to their fault.

Legal analysis: The specific amount of the performance bond is determined according to the proportion of 5-10% of the winning bid price. The specific amount of the margin is determined by the difference between the maximum limit price and the winning bid.

Legal basis: Article 502 of the Civil Code of the People's Republic of China A contract established in accordance with law shall take effect upon its establishment, unless otherwise provided by law or otherwise agreed by the parties.

In accordance with the provisions of laws and administrative regulations, if the contract shall go through formalities such as approval, follow those provisions. If the failure to handle the approval and other measures affect the validity of the contract, it does not affect the validity of the provisions of the contract on the performance of obligations such as reporting for approval and the validity of the relevant clauses. If the party who should go through the formalities such as applying for approval fails to perform its obligations, the other party may request that it bear the responsibility for violating the obligations.

Where, in accordance with the provisions of laws and administrative regulations, the modification, transfer, or termination of a contract shall go through formalities such as approval, the provisions of the preceding paragraph shall apply.