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pro rata

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Mon, 01/23/2012 - 05:42
LB
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when a payment guarantee states that it reduces pro rata by any payment effected under this gtee, what does it mean? that it is reduced by the paid amount?  is this a correct wording? or should it be stated in other words, like reduced by the amount (s) paid under the gtee? 

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Mon, 01/23/2012 - 06:16
#1
pan
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Pro rata

Hi Friend,

 

by pro rata I understad that if a guarantee is covering 50% of a certain amount, if the amount is reduced of 20% the guaranteed amount will reduce by 20% too, 50 less 10 = balance 40.

Is it clear?

Other comments appreciated

Ciao

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Mon, 01/23/2012 - 06:34
#2
LB
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Joined: 09/02/2010
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pro rata

Thnaks Ciao,

I understand your method of calculation. But we used this reduction method mostly in advance payment guarantees. In payment guarantees we usually reduce the gtee amount by the whole payment effected under the gtee, as no seller will give you goods worths of EUR 100, having security only for EUR 50. it may happens only in developed contries.

I assume that the issued did not quite understand the pro rata definition(proportionally).

 

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