This paper addresses the topic of bank guarantees, specifically demand guarantees, which are regulated by national legislation and international sources of legislation. It also includes the practical application of guarantees demonstrated through various types of bank guarantees used in construction. Every debtor-creditor relationship carries a certain level of uncertainty, especially in the construction industry, where contracts can involve substantial amounts. In these transactions, the necessity to ensure the fulfillment of obligations is anticipated. For example, if a contractor undertakes the obligation to perform a specific task, the client's reasonable expectation is to secure themselves against potential non-fulfillment of that obligation. Bank guarantees provide an effectively applicable form of security to the parties involved, as if they had „cash in hand“. The Guarantor's monetary obligation constitutes an independent undertaking separate from the obligation contained in the underlying contract This precisely is what makes this finantial instrument interesting and useful. There will be two contracts in existence: the Underlying Contract and the Bank Guarantee Agreement. These two will be independent of each other, while simultaneously being indirectly connected. The possibility of quick and simple collection makes bank guarantees particularly attractive when compared with other finantial security instruments, allowing for the successful avoidance of lengthy proceedings in courts or other institutions to enforce claims.