Performance Bank Guarantees are essential financial instruments in Malaysian business transactions, particularly in projects requiring substantial performance obligations. This document is typically required when one party needs security for the performance obligations of another party, such as in construction projects, supply contracts, or service agreements. The guarantee provides the beneficiary with direct recourse to the bank for a specified sum if the principal fails to meet their contractual obligations. Under Malaysian law, these guarantees must comply with local banking regulations and the Financial Services Act 2013, while following Bank Negara Malaysia's guidelines. The document includes key elements such as the guaranteed amount, validity period, conditions for demand, and specific performance obligations being secured.
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1. Parties: Identification of the Bank (Guarantor), Principal (Party whose performance is guaranteed), and Beneficiary
2. Background: Details of the underlying contract or obligation being guaranteed, including reference numbers and dates
3. Definitions: Key terms used in the guarantee including 'Guaranteed Sum', 'Expiry Date', and 'Demand'
4. Guarantee and Undertaking: Core obligation of the bank to pay the guaranteed sum upon valid demand
5. Amount of Guarantee: Specification of the maximum guaranteed sum in figures and words
6. Validity Period: Clear statement of when the guarantee becomes effective and its expiry date
7. Conditions for Demand: Specific requirements and process for making a valid claim under the guarantee
8. Payment Obligations: Terms of payment including timeline and method upon receipt of valid demand
9. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction of Malaysian courts
1. Extension Provisions: Used when parties want to include mechanism for extending the validity period
2. Partial and Multiple Demands: Include when allowing the beneficiary to make multiple claims up to the guaranteed sum
3. Assignment Restrictions: Include when specific restrictions on assignment of the guarantee are required
4. Counter-Indemnity: Used when the bank requires specific indemnity provisions from the principal
5. Language Provision: Include when the guarantee might be translated or used in international context
6. Bank's Maximum Liability: Include when need to clarify liability limits including interest and costs
1. Form of Demand: Template for making a valid demand under the guarantee
2. Specimen Signatures: Authorized signatures of the beneficiary's representatives for making demands
3. Underlying Contract Extract: Relevant excerpts from the underlying contract being guaranteed
4. Supporting Documents List: List of documents required to be submitted with any demand
Relevant legal definitions
Clauses
Relevant Industries
Construction
Infrastructure
Manufacturing
Engineering
Real Estate Development
Energy
Oil and Gas
Telecommunications
Government Contracts
International Trade
Relevant Teams
Legal
Finance
Treasury
Procurement
Project Management
Risk Management
Commercial
Compliance
Operations
Relevant Roles
Chief Financial Officer
Finance Director
Legal Counsel
Contract Manager
Project Manager
Treasury Manager
Risk Manager
Procurement Manager
Commercial Director
Business Development Manager
Company Secretary
Compliance Officer
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