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The Financial Performance Guarantee is a crucial financial instrument in Nigerian business transactions, particularly in high-value contracts where parties seek security for performance obligations. This document is commonly used in construction projects, government contracts, supply agreements, and international trade transactions where the beneficiary requires assurance of the principal's performance. The guarantee must comply with Nigerian banking regulations, particularly the Banks and Other Financial Institutions Act (BOFIA) 2020 and Central Bank of Nigeria directives. It typically includes specific provisions regarding the guaranteed amount, validity period, demand procedures, and payment terms. The document is essential for risk mitigation in commercial transactions and is often required in tender processes, major contracts, and infrastructure projects where substantial financial commitments are involved.

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

2. Background: Context of the underlying transaction and purpose of the guarantee, including reference to the primary contract being guaranteed

3. Definitions: Key terms used throughout the guarantee document, including financial terms, guaranteed obligations, and trigger events

4. Guarantee and Indemnity: Core guarantee provisions, amount, scope of guaranteed obligations, and indemnification terms

5. Duration and Validity: Term of the guarantee, effective date, expiry conditions, and any extension provisions

6. Demand Requirements: Procedures and conditions for making a valid demand under the guarantee, including notice requirements and documentation

7. Payment Terms: Timeline for payment upon valid demand, currency, payment method, and bank details

8. Reduction and Release: Conditions under which the guarantee amount may be reduced or the guarantee released

9. Representations and Warranties: Standard declarations by the guarantor regarding authority, capacity, and enforceability

10. Assignment and Transfer: Restrictions or permissions regarding the transfer of rights under the guarantee

11. Governing Law and Jurisdiction: Specification of Nigerian law as governing law and jurisdiction for disputes

12. Notices: Communication procedures and contact details for all parties

13. Execution: Signature blocks and execution requirements