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A Performance guarantee is a binding commitment where a bank or insurance company promises to pay a specified amount if someone fails to fulfill their obligations. In Austria, these guarantees are commonly used in construction projects, public tenders, and commercial contracts to protect against non-performance or delays.

Under Austrian law, these guarantees create an independent obligation that's separate from the underlying contract. This means the guarantor must pay upon first demand, without investigating the main agreement's details. Business partners often require these guarantees before signing major contracts, especially in cross-border transactions where Austrian companies work with international clients.

Performance guarantees become essential when taking on significant business commitments in Austria, especially for construction projects, large supply contracts, or public tenders. They protect your interests when working with new partners or on high-value deals where trust needs extra backing.

Consider using them when bidding on government contracts, managing major construction projects, or establishing new supplier relationships. Austrian banks typically issue these guarantees for 5-10% of the contract value. They're particularly valuable when dealing with international partners, as they provide immediate access to compensation if something goes wrong, without lengthy court proceedings.

• Performance Guarantee Bond: Basic form used in construction projects, typically covers 5-10% of contract value with fixed expiry date
• Contract Performance Guarantee: More comprehensive version covering broader contractual obligations, often used in commercial agreements and public tenders
• Payment And Performance Guarantee: Dual-purpose guarantee covering both payment obligations and performance requirements, common in large-scale construction and infrastructure projects

• Banks and Insurance Companies: Act as guarantors, issuing Performance guarantees after assessing the contractor's creditworthiness and reliability
• Construction Companies: Often required to provide these guarantees when bidding on large projects or public contracts
• Government Agencies: Request guarantees from contractors to protect public funds and ensure project completion
• Commercial Lawyers: Draft and review guarantee terms to ensure compliance with Austrian banking and contract law
• Project Developers: Require guarantees from contractors and sometimes provide them to investors or clients

• Project Details: Gather exact contract value, project timeline, and scope of work to be guaranteed
• Party Information: Collect full legal names, registration numbers, and addresses of all involved parties
• Guarantee Amount: Calculate the guarantee sum (typically 5-10% of contract value in Austria)
• Duration Terms: Define clear start and end dates, including any automatic extension conditions
• Bank Requirements: Prepare financial statements and project documentation for the guarantor bank
• Template Selection: Use our platform's automated system to generate a legally compliant Performance guarantee tailored to Austrian requirements

• Guarantee Amount: Clear statement of the guaranteed sum and currency in both numbers and words
• Parties' Details: Full legal names and addresses of guarantor, principal, and beneficiary
• Trigger Events: Specific conditions that activate the guarantee payment obligation
• Validity Period: Explicit start and end dates of the guarantee coverage
• Payment Terms: Procedure and timeline for claiming and receiving payment
• Governing Law: Reference to Austrian law and jurisdiction specifications
• Demand Format: Required format and content of payment demands under Austrian banking practices

A Performance guarantee is often confused with a Bank Guarantee, but they serve different purposes in Austrian business law. While both provide financial security, their scope and application differ significantly.

• Purpose and Scope: Performance guarantees specifically cover the completion of contractual obligations or project milestones. Bank guarantees are broader, covering various financial commitments including loans, payments, or tenders.
• Trigger Conditions: Performance guarantees activate when specific project-related failures occur. Bank guarantees can be called upon for any predetermined financial default.
• Duration Structure: Performance guarantees typically align with project timelines and include specific milestone dates. Bank guarantees often have simpler, fixed terms without project-specific conditions.
• Risk Assessment: Banks evaluate project-specific risks when issuing performance guarantees, while bank guarantees focus primarily on financial creditworthiness.