The Advance Bank Guarantee is a fundamental financial instrument in Saudi Arabian commercial transactions, particularly utilized in construction projects, government contracts, and large-scale commercial dealings. This document is required when a party (typically a contractor or supplier) receives advance payments and needs to provide security to the paying party. The guarantee is issued by a Saudi bank or a foreign bank operating through a Saudi correspondent bank, ensuring compliance with both Saudi Central Bank (SAMA) regulations and Shariah law principles. The document includes specific details about the guaranteed amount, validity period, conditions for calling the guarantee, and payment mechanisms. It serves as a risk mitigation tool, providing assurance to the beneficiary while enabling the applicant to receive advance payments necessary for project execution.
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1. Bank Details and Reference: Information identifying the issuing bank, guarantee reference number, and date of issuance
2. Beneficiary Details: Full legal name and address of the party receiving the guarantee
3. Applicant Details: Full legal name and address of the party requesting the guarantee
4. Guarantee Amount: The maximum amount of the guarantee expressed in numbers and words
5. Purpose of Guarantee: Clear statement of the purpose for which the guarantee is being issued
6. Underlying Contract Reference: Details of the primary contract or tender for which the guarantee is being issued
7. Validity Period: Clear specification of the guarantee's effective date and expiry date
8. Terms of Payment: Conditions under which the guarantee can be called and payment procedure
9. Governing Law and Jurisdiction: Specification of Saudi law as governing law and relevant jurisdiction
10. Shariah Compliance Statement: Declaration of compliance with Islamic banking principles
11. Bank's Undertaking: The bank's unconditional commitment to pay upon valid demand
1. Counter Guarantee Details: Required when the guarantee is issued based on a counter-guarantee from another bank
2. Assignment Clause: Include when the beneficiary may need to assign the guarantee rights
3. Language Clause: Required when the guarantee is issued in multiple languages
4. Reduction Clause: Include when the guarantee amount can be reduced progressively
5. Force Majeure Provisions: Optional clause addressing extraordinary circumstances
6. Notice Requirements: Detailed procedures for notices when standard terms are insufficient
7. Dispute Resolution Mechanism: Include when specific dispute resolution procedures are required beyond standard jurisdiction
1. Form of Demand: Template for making a claim under the guarantee
2. Copy of Underlying Contract: Reference copy of the contract for which the guarantee is issued
3. Authentication Documents: Copies of authorized signatures and authentication methods
4. Payment Instructions: Detailed banking coordinates and payment procedures
5. Supporting Documents: List of required documents to be presented with any demand
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Construction and Infrastructure
Government and Public Sector
Manufacturing
Energy and Utilities
Trading and Import/Export
Real Estate Development
Defense Contracting
Telecommunications
Transportation and Logistics
Relevant Teams
Legal
Finance
Treasury
Procurement
Project Management
Risk Management
Compliance
Commercial
Trade Finance
Corporate Banking
Islamic Banking
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Contract Manager
Project Manager
Legal Counsel
Compliance Officer
Risk Manager
Banking Relationship Manager
Procurement Manager
Commercial Director
Credit Manager
Islamic Banking Specialist
Corporate Banking Officer
Trade Finance Manager
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