Document background
The Performance Guarantee Agreement is a crucial document in Nigerian business transactions, particularly in sectors requiring significant performance commitments. It serves as a risk mitigation tool where one party provides financial backing for another party's obligations. This agreement type is commonly used in construction projects, tender submissions, supply contracts, and other commercial arrangements where performance security is required. Under Nigerian law, these guarantees must comply with local banking regulations, including BOFIA 2020 and CBN guidelines. The document typically includes detailed provisions on the guarantee's scope, demand procedures, validity period, and enforcement mechanisms. It's particularly relevant in the current Nigerian business environment where security for performance is increasingly important in commercial transactions.
