Document background
The Direct Bank Guarantee is a crucial financial instrument used in commercial transactions under Dutch law where one party requires security for the performance of obligations by another party. This document is particularly relevant in scenarios such as construction projects, tender submissions, advance payment security, or performance security for large commercial contracts. The Direct Bank Guarantee creates an independent obligation by the bank to pay, separate from the underlying transaction, making it a preferred security instrument in international trade and domestic commercial dealings. The document must comply with Dutch civil law requirements, particularly the provisions of the Burgerlijk Wetboek (Dutch Civil Code) and the Wet op het financieel toezicht (Financial Supervision Act), while also adhering to international banking practices. It typically includes specific provisions regarding the guarantee amount, validity period, demand requirements, and payment conditions.
