Document background
The Bank Guarantee Performance Bond is a crucial financial security instrument in commercial transactions under Dutch law. It is commonly used when a party (the beneficiary) requires security for the performance obligations of another party (the principal) in significant commercial contracts. The guarantee provides an independent commitment from a bank to pay a specified sum upon compliant demand, typically up to 10% of the underlying contract value. This type of guarantee is particularly vital in construction, infrastructure, and large commercial projects where performance risk needs to be mitigated. The document must comply with Dutch civil law, banking regulations, and relevant EU directives, while often incorporating international banking practices such as the ICC's URDG rules. The independent nature of the guarantee means it can be called upon without first proving breach of the underlying contract, making it a powerful security instrument.
