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Deferred Payment Bank Guarantee for United Arab Emirates

Deferred Payment Bank Guarantee Template for United Arab Emirates

A Deferred Payment Bank Guarantee is a financial instrument governed by UAE law, particularly Federal Law No. 18 of 1993 (Commercial Transactions Law) and UAE Central Bank regulations. It represents an irrevocable commitment by a bank to make payments to a beneficiary according to a specified schedule, typically used in international trade and large commercial transactions. The guarantee provides security to the seller/exporter while allowing the buyer/importer to defer payment, essentially acting as a form of financing. The document includes specific payment terms, conditions for demands, and compliance requirements under UAE banking regulations.

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What is a Deferred Payment Bank Guarantee?

The Deferred Payment Bank Guarantee is a crucial financial instrument in UAE commercial transactions, particularly where parties seek to facilitate trade while managing cash flow and risk. This document is commonly used when a buyer needs to defer payment for goods or services but must provide security to the seller. The guarantee, issued under UAE law and banking regulations, commits the bank to pay the beneficiary according to a predetermined schedule if the principal fails to meet their payment obligations. It includes specific provisions for payment terms, demand requirements, and validity periods, while ensuring compliance with UAE Central Bank regulations and international banking practices. The document is particularly relevant for international trade transactions, large commercial contracts, and infrastructure projects where extended payment terms are necessary.

What sections should be included in a Deferred Payment Bank Guarantee?

1. Parties: Identifies the bank (guarantor), the beneficiary, and the principal (applicant) for whom the guarantee is issued

2. Background: Describes the underlying transaction or relationship necessitating the guarantee and references the relevant commercial agreement

3. Definitions: Defines key terms used throughout the guarantee document

4. Guarantee Amount and Currency: Specifies the maximum amount of the guarantee and the currency of payment

5. Scope of Guarantee: Details the specific obligations or performance being guaranteed

6. Payment Terms: Specifies the deferred payment structure, including payment schedule and conditions

7. Demand Requirements: Outlines the process and requirements for making a valid demand under the guarantee

8. Expiry and Claims Period: States the validity period of the guarantee and deadline for claims

9. Governing Law and Jurisdiction: Specifies UAE law as governing law and defines jurisdiction for disputes

10. Notices: Details how and where formal communications between parties should be made

What sections are optional to include in a Deferred Payment Bank Guarantee?

1. Counter Guarantee: Required when the guarantee is issued through a correspondent bank or involves multiple banking parties

2. Assignment: Include when the rights under the guarantee may need to be transferable

3. Force Majeure: Add when specific force majeure provisions are required beyond standard UAE law provisions

4. Language: Include when the guarantee needs to be bilingual or specify which language version prevails

5. Partial Drawings: Include when multiple drawings under the guarantee are permitted

6. Anti-Money Laundering Compliance: Add when dealing with international transactions or high-risk sectors

What schedules should be included in a Deferred Payment Bank Guarantee?

1. Schedule 1 - Form of Demand: Template for making a valid demand under the guarantee

2. Schedule 2 - Payment Schedule: Detailed schedule of deferred payment dates and amounts

3. Schedule 3 - Supporting Documents: List of required documents to be presented with any demand

4. Appendix A - Underlying Commercial Agreement Details: Key details from the underlying commercial agreement relevant to the guarantee

5. Appendix B - Authorized Signatories: List of persons authorized to make demands under the guarantee

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Publisher

Ƶ

Document Type

Bank Guarantee

Sector

Banking

Cost

Free to use
Relevant legal definitions






























Clauses


























Relevant Industries

Banking and Financial Services

International Trade

Construction and Infrastructure

Manufacturing

Oil and Gas

Real Estate Development

Wholesale and Distribution

Engineering and Industrial Services

Telecommunications

Government and Public Sector

Relevant Teams

Legal

Finance

Treasury

Trade Finance

Risk Management

Compliance

Commercial Operations

Banking Operations

Credit Administration

International Business

Relevant Roles

Trade Finance Manager

Corporate Banking Officer

Legal Counsel

Chief Financial Officer

Treasury Manager

Risk Management Officer

Compliance Officer

Commercial Director

Finance Director

Import/Export Manager

Credit Manager

Documentary Credits Specialist

Banking Operations Manager

Contract Administrator

Industries





Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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