The On-Demand Bank Guarantee is a crucial financial instrument in Indonesian commercial transactions, particularly where parties seek immediate, unconditional payment security. This document is commonly used in construction projects, tender submissions, advance payment security, and performance guarantees. It represents an independent undertaking by a bank to pay a specified sum upon the beneficiary's demand, without requiring proof of default. The guarantee must comply with Indonesian banking regulations, including OJK requirements and Bank Indonesia guidelines, while often incorporating international banking practices. It serves as a risk mitigation tool, providing beneficiaries with quick access to funds while protecting their interests in commercial transactions.
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1. Parties: Identifies the bank (guarantor), the applicant (principal), and the beneficiary
2. Background: Brief context of the underlying transaction or relationship necessitating the guarantee
3. Definitions: Key terms used throughout the guarantee document
4. Guarantee Amount: Specifies the maximum amount of the guarantee and the currency
5. Scope of Guarantee: Details what obligations or performance the guarantee covers
6. Duration and Validity: Specifies the effective date, expiry date, and any automatic extension conditions
7. Demand Requirements: Specifies the process and requirements for making a demand under the guarantee
8. Payment Terms: Details the timing and method of payment upon receipt of a valid demand
9. Reduction and Release: Conditions under which the guarantee amount may be reduced or the guarantee released
10. Governing Law and Jurisdiction: Specifies Indonesian law as governing law and relevant jurisdiction for disputes
11. Notices: Contact details and method for formal communications between parties
1. Language: Required if the guarantee is bilingual, specifying which language prevails
2. Transfer and Assignment: Include if the guarantee is transferable or assignable
3. Counter-Guarantee: Required if there is a counter-guarantee arrangement with another bank
4. Foreign Exchange Provisions: Include if the guarantee involves foreign currency and exchange rate considerations
5. Anti-Money Laundering Compliance: Include if required by specific banking regulations or international transactions
6. Force Majeure: Include for longer-term guarantees where force majeure events might impact obligations
1. Form of Demand: Template for making a valid demand under the guarantee
2. Specimen Signatures: Authorized signatures of the parties for verification purposes
3. Underlying Contract Reference: Summary or extract of the underlying contract being guaranteed
4. Fee Schedule: Details of bank fees, charges, and commission applicable to the guarantee
5. Supporting Documents: List of required supporting documents for guarantee issuance or demand
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Construction and Infrastructure
International Trade
Manufacturing
Energy and Resources
Real Estate Development
Government and Public Sector
Telecommunications
Mining
Oil and Gas
Relevant Teams
Legal
Finance
Treasury
Risk Management
Procurement
Commercial Operations
Project Management
Trade Finance
Compliance
Corporate Secretariat
Relevant Roles
Chief Financial Officer
Treasury Manager
Finance Director
Commercial Director
Legal Counsel
Contract Manager
Risk Manager
Project Manager
Procurement Manager
Trade Finance Manager
Banking Relationship Manager
Credit Risk Officer
Company Secretary
General Counsel
Business Development Manager
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