Common use of Pre-financing Clause in Contracts

Pre-financing. Pre-financing is intended to provide the beneficiaries with a float. Where required by the provisions of Article I.5 on pre-financing, the co-ordinator shall furnish a financial guarantee from a bank or an approved financial institution established in one of the Member States of the Union. The guarantor shall stand as first demand guarantor and shall not require the Commission to have recourse against the principal debtor (the co-ordinator). The financial guarantee shall provide that it remains in force until the pre-financing is cleared against interim payment(s) or payment of the balance by the Commission to the co-ordinator or, in the absence of such clearing, three months after a recovery is notified to the co-ordinator by which the Commissions asks him to repay the pre-financing. The Commission undertakes to release the guarantee within the following month.