Document background
A Cheque Guarantee Letter is commonly used in Malaysian business transactions where additional payment security is required beyond a standard cheque. This document becomes particularly relevant in high-value transactions or when dealing with new business relationships where trust needs to be established. The letter, issued under Malaysian banking regulations and governed by local financial laws, provides the beneficiary with the bank's commitment to honor the cheque payment if the drawer defaults. Typically used in commercial transactions, property purchases, or international trade, the Cheque Guarantee Letter includes specific details about the cheque(s), terms of the guarantee, validity period, and claiming procedures. It serves as a risk mitigation tool, effectively transforming a regular cheque into a bank-backed payment instrument.
