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The Guaranty Fee Agreement is essential in the UAE business landscape where guarantees play a crucial role in commercial transactions. This document is used when one party (the Guarantor) agrees to provide a guarantee in favor of a beneficiary on behalf of another party (the Principal), in exchange for a fee. The agreement sets out the fee structure, payment terms, and related obligations, ensuring compliance with UAE Federal Laws, including the Civil Code (Federal Law No. 5 of 1985) and relevant banking regulations. It's particularly important in project finance, trade finance, and corporate transactions where guarantees are required for business operations. The document must be structured to comply with both civil law requirements and Sharia principles, making it unique to the UAE jurisdiction. Typically used in conjunction with the underlying guarantee, this agreement protects the interests of both the guarantor and the principal by clearly defining their rights and obligations regarding the fee arrangement.

1. Parties: Identifies and defines the parties to the agreement - typically the Guarantor (providing the guarantee) and the Principal (paying the fee)

2. Background: Contextual information explaining the purpose of the agreement and the underlying guarantee arrangement

3. Definitions: Defines key terms used throughout the agreement

4. Guarantee Fee: Specifies the fee amount, calculation method, and payment structure

5. Payment Terms: Details the timing, method, and currency of fee payments

6. Guarantor's Obligations: Outlines the scope and nature of the guarantee being provided

7. Principal's Obligations: Sets out the principal's duties, including fee payment and information provision

8. Representations and Warranties: Standard declarations by both parties regarding their capacity and authority

9. Term and Termination: Duration of the agreement and circumstances for early termination

10. Notices: Communication procedures between parties

11. Governing Law and Jurisdiction: Confirms UAE law governance and jurisdiction for disputes

12. General Provisions: Standard boilerplate clauses including amendments, assignments, and severability