The Advance Payment Guarantee Bond is essential in commercial transactions where significant advance payments are required before work or delivery begins. This document, governed by Austrian law, provides security to the party making the advance payment (typically a buyer or employer) by ensuring that a bank or financial institution will repay the advanced amount if the contractor/supplier fails to fulfill their obligations. The guarantee typically covers a percentage of the contract value paid in advance and includes provisions for gradual reduction as the contract progresses. It's particularly crucial in large-scale projects, international trade, and construction contracts where substantial upfront payments are common. The document must comply with Austrian banking regulations and civil code requirements, particularly regarding guarantee obligations and payment conditions.
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1. Guarantee Details: Specifies the guarantee amount, reference number, and date of issuance
2. Parties: Identifies the Guarantor (bank/financial institution), the Principal (contractor/supplier), and the Beneficiary (buyer/employer)
3. Underlying Transaction: References the main contract or transaction for which the advance payment is being made
4. Guarantee Amount and Currency: States the specific amount and currency of the advance payment guarantee
5. Validity Period: Specifies the effective date and expiry date of the guarantee
6. Payment Conditions: Details the conditions under which the guarantee can be called and payment requirements
7. Form of Demand: Specifies how the beneficiary must make a claim under the guarantee
8. Reduction Clause: Explains how the guarantee amount reduces as the advance payment is repaid/amortized
9. Governing Law and Jurisdiction: Confirms Austrian law as governing law and specifies jurisdiction for disputes
1. Assignment Clause: Include when the guarantee needs to be transferable or assignable
2. Language Clause: Include when the guarantee may be used internationally to specify the prevailing language
3. Force Majeure: Include when specific force majeure provisions are required beyond standard Austrian law
4. URDG 758 Incorporation: Include when the guarantee should explicitly follow ICC Uniform Rules for Demand Guarantees
5. Anti-Money Laundering Compliance: Include when dealing with international transactions or high-risk jurisdictions
6. Electronic Presentation: Include when allowing for electronic submission of demands and documents
1. Form of Demand: Template for making a valid demand under the guarantee
2. Reduction Schedule: Schedule showing the progressive reduction of the guarantee amount over time
3. Underlying Contract Extract: Relevant excerpts from the main contract referring to the advance payment
4. Authorized Signatories: List of persons authorized to make demands under the guarantee
Relevant legal definitions
Clauses
Relevant Industries
Construction
Manufacturing
International Trade
Infrastructure Development
Energy
Defense
Telecommunications
Engineering Services
Industrial Equipment
Public Sector Projects
Relevant Teams
Legal
Finance
Procurement
Commercial
Risk Management
Treasury
Operations
Project Management
Contract Administration
International Trade
Relevant Roles
Contract Manager
Procurement Manager
Project Director
Financial Controller
Treasury Manager
Legal Counsel
Risk Manager
Commercial Director
Chief Financial Officer
Banking Relationship Manager
Project Finance Manager
Operations Director
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