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Performance Guarantee Bond

Performance Guarantee Bond Template for Germany

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Key Requirements PROMPT example:

Performance Guarantee Bond

"I need a Performance Guarantee Bond for a €5 million construction project in Berlin, where Deutsche Bank will be the guarantor for our contractor ABC Construction GmbH, with staged completion milestones throughout 2025 and partial release provisions."

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Document background
The Performance Guarantee Bond is a crucial security instrument in German commercial practice, particularly in construction, manufacturing, and international trade transactions. It provides financial security to project owners or employers (beneficiaries) against potential defaults or non-performance by contractors or suppliers (principals). The guarantee is typically issued by a bank or financial institution and is governed by German law, specifically the provisions of the BGB (German Civil Code) regarding guarantees and suretyship. The document becomes relevant when significant contractual obligations need to be secured, such as in large construction projects, supply contracts, or service agreements. The Performance Guarantee Bond usually contains specific provisions about the guaranteed amount, validity period, conditions for demands, and payment terms. It may be issued as either an accessory guarantee (Bürgschaft) or an independent guarantee (selbstständiges Garantieversprechen), with the latter being more common in commercial practice.
Suggested Sections

1. Parties: Identification of the Guarantor (typically a bank), the Beneficiary (party receiving the guarantee), and the Principal (party whose performance is being guaranteed)

2. Background: Context of the guarantee, including reference to the underlying contract or obligation being guaranteed

3. Definitions: Key terms used throughout the guarantee bond, including 'Guaranteed Amount', 'Expiry Date', and 'Underlying Contract'

4. Guarantee: Core guarantee commitment, specifying the unconditional nature of the guarantee and the maximum guaranteed amount

5. Demand Requirements: Formal requirements for making a valid demand under the guarantee, including any required documentation

6. Payment Terms: Timeframe and method for payment upon receipt of a valid demand

7. Expiry: Terms regarding the duration of the guarantee and conditions for its expiration

8. Reduction Provisions: Conditions under which the guarantee amount may be reduced

9. Governing Law and Jurisdiction: Explicit statement of German law as governing law and designation of competent courts

Optional Sections

1. Transfer and Assignment: Provisions regarding the transferability of the guarantee - include when the guarantee might need to be transferred

2. Force Majeure: Provisions for extraordinary circumstances - include in high-value or international guarantees

3. Language: Specification of prevailing language - include when guarantee is issued in multiple languages

4. Partial Demands: Provisions allowing for multiple partial demands - include when project completion is in stages

5. Counter-Guarantee: Terms relating to any counter-guarantee arrangements - include when involving multiple banks or jurisdictions

6. Notice Requirements: Detailed communication procedures - include for complex project guarantees

7. Tax Provisions: Handling of tax implications - include when tax considerations are significant

Suggested Schedules

1. Form of Demand: Template for making a valid demand under the guarantee

2. Underlying Contract Extract: Relevant excerpts from the underlying contract being guaranteed

3. Authorization Documents: Evidence of authority of the guarantor's signatories

4. Communication Details: Contact information and procedures for all parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions






























Clauses






























Relevant Industries

Construction

Infrastructure

Manufacturing

Engineering

International Trade

Energy

Real Estate Development

Telecommunications

Defense Contracting

Industrial Projects

Relevant Teams

Legal

Finance

Treasury

Project Management

Commercial

Risk Management

Procurement

Compliance

Construction Management

Contract Administration

Relevant Roles

Project Manager

Contract Manager

Legal Counsel

Finance Director

Commercial Director

Risk Manager

Treasury Manager

Construction Manager

Procurement Manager

Chief Financial Officer

Bank Relationship Manager

Compliance Officer

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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Financial Performance Guarantee

A German law-governed guarantee instrument where a guarantor secures the performance obligations of a principal debtor to a beneficiary.

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Payment And Performance Guarantee

A German law-governed guarantee securing both payment and performance obligations of a principal debtor, typically issued by a bank as an independent obligation.

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Corporate Performance Guarantee

A German law-governed guarantee instrument where a corporate entity guarantees the performance obligations of another entity, providing security under the German Civil and Commercial Codes.

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Performance Guarantee Bond

A German law-governed financial guarantee issued by a bank to secure a party's performance obligations, typically used in commercial and construction contexts.

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