¶¶Òõ¶ÌÊÓƵ

The Performance Guarantee Bond is a crucial security instrument in Nigerian business transactions, particularly in construction, infrastructure, and government contracts. It serves as a risk mitigation tool where substantial financial commitments are involved. The document is typically required when a company (Principal) enters into a significant contract and the other party (Beneficiary) needs security for the Principal's performance. The bond, issued by a bank or financial institution under Nigerian law, provides assurance that the Beneficiary can recover financial losses up to the guaranteed amount if the Principal fails to perform. This type of guarantee is often mandatory for government contracts and major private sector projects in Nigeria, and must comply with local banking regulations and contract law. The document specifies the guaranteed amount, duration, conditions for calling the guarantee, and payment terms, typically ranging from 5% to 20% of the main contract value.

1. Parties: Identifies the Guarantor (usually a bank/financial institution), the Principal (the party whose performance is being guaranteed), and the Beneficiary

2. Background: Describes the underlying contract or obligation being guaranteed and the context for the guarantee

3. Definitions: Defines key terms used throughout the document

4. Guarantee: Sets out the core guarantee commitment, including the maximum guaranteed amount

5. Duration of Guarantee: Specifies the validity period of the guarantee, including start date and expiry conditions

6. Conditions for Calling the Guarantee: Details the circumstances and process under which the beneficiary can make a demand under the guarantee

7. Payment Terms: Specifies how and when payment must be made following a valid demand

8. Reduction and Release: Describes circumstances under which the guaranteed amount may be reduced and when the guarantee will be released

9. Assignment and Transfer: Restrictions on transferring or assigning rights under the guarantee

10. Governing Law and Jurisdiction: Specifies Nigerian law as governing law and establishes jurisdiction for disputes

11. Notices: Details how formal communications between parties should be made and delivered