A Back to Back Guarantee (also known as back-to-back credit or reciprocal credit) is two letters of credit issued by two banks, one guaranteeing payment by a seller and the other guaranteeing performance by a buyer that is the arrangement securities for a contractor or seller’s performance at the same time a guarantee is arranged to the owner or buyer’s payment. The Back to Back Guarantee is to protect the interests of both parties involved in the transaction from incurring a loss, or at least minimising that loss to a great degree.
Related Definitions in the Project: The Project Contract
