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The Performance Letter of Guarantee is a fundamental document in UAE commercial transactions, particularly vital for securing large-scale contracts and projects. This instrument is issued when a party (the principal) needs to provide performance security to another party (the beneficiary), with a bank guaranteeing compensation up to a specified amount if contractual obligations are not met. The document must comply with UAE Federal Law No. 18 of 1993 (Commercial Transactions Law) and relevant Central Bank regulations, often following international banking practices while adhering to local requirements. Performance Letters of Guarantee are typically required in tender submissions, construction contracts, and major commercial agreements, providing beneficiaries with readily accessible financial security without the need for lengthy legal proceedings to prove damages.

1. Bank Details and Reference Number: Issuing bank's details, letter reference number, and date of issuance

2. Beneficiary Information: Full name and address of the party in whose favor the guarantee is issued

3. Principal Information: Details of the party whose performance is being guaranteed

4. Guarantee Amount: The specific amount of the guarantee in both numbers and words, including currency

5. Underlying Contract Reference: Reference to the main contract or tender for which the guarantee is being issued

6. Guarantee Scope: Clear statement of what performance is being guaranteed and the conditions under which the guarantee can be called

7. Validity Period: Explicit start and end dates of the guarantee, including any automatic extension conditions

8. Claim Procedure: Process and requirements for making a claim under the guarantee

9. Governing Law and Jurisdiction: Statement that UAE law governs and specification of jurisdiction for disputes