The Retention Bank Guarantee is a crucial document in construction and major project contracts under Austrian law, where it replaces the traditional practice of withholding a percentage of payment (retention money) to secure against defects. This type of guarantee is particularly important as it improves cash flow for contractors while maintaining security for project owners. The document outlines the bank's unconditional obligation to pay the guaranteed sum upon demand, typically ranging from 5% to 10% of the contract value. Used extensively in Austrian construction and infrastructure projects, the Retention Bank Guarantee must comply with specific requirements under the Austrian Civil Code (ABGB) and Banking Act (BWG). It includes essential details such as parties involved, guarantee amount, validity period, and conditions for claims.
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1. Bank Details and Reference: Full name and address of the issuing bank, guarantee reference number, and date
2. Beneficiary Details: Full name and address of the party in whose favor the guarantee is issued
3. Principal Details: Full name and address of the party on whose behalf the guarantee is issued
4. Underlying Contract Reference: Details of the main contract for which the retention guarantee is issued, including contract number and date
5. Guarantee Amount: The maximum amount covered by the guarantee, stated in both numbers and words
6. Purpose of Guarantee: Specific description of what the guarantee covers (retention money for construction/delivery etc.)
7. Validity Period: Clear statement of when the guarantee becomes effective and when it expires
8. Payment Conditions: Terms under which the bank will make payment upon receiving a demand
9. Demand Requirements: Specific format and documentation required for making a valid demand under the guarantee
10. Governing Law and Jurisdiction: Explicit statement that Austrian law governs and specification of jurisdiction
1. Reduction Clause: Used when the guarantee amount can be reduced over time according to specific milestones or conditions
2. Assignment Provisions: Include when the guarantee needs to be transferable to another beneficiary
3. Dispute Resolution: Detailed dispute resolution procedures, included for complex projects or when required by the underlying contract
4. Special Conditions: Any project-specific conditions or requirements that affect the guarantee's operation
5. Multiple Beneficiaries Clause: Include when there are multiple parties who can make a claim under the guarantee
6. Currency Provisions: Include for international projects where currency conversion might be relevant
1. Form of Demand: Template for making a valid demand under the guarantee
2. Payment Schedule: If the guarantee amount reduces over time, a schedule showing the reduction timeline
3. Project Milestones: When the guarantee is linked to specific project milestones, a detailed list of these milestones
4. Authorization Documents: Copies of relevant authorization documents from the principal authorizing the bank to issue the guarantee
Relevant legal definitions
Clauses
Relevant Industries
Construction
Infrastructure
Manufacturing
Engineering
Real Estate Development
Energy
Industrial Projects
Transportation
Public Works
Commercial Development
Relevant Teams
Legal
Finance
Commercial
Procurement
Project Management
Risk Management
Treasury
Construction Management
Contract Administration
Relevant Roles
Project Manager
Construction Manager
Contract Administrator
Finance Director
Legal Counsel
Commercial Manager
Procurement Manager
Risk Manager
Treasury Manager
Banking Relationship Manager
Chief Financial Officer
Project Director
Construction Director
Claims Manager
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