The Bank Guarantee And Performance Guarantee document is essential in Saudi Arabia's commercial landscape where significant business transactions require robust security mechanisms. This document type is commonly used in major projects, construction contracts, and commercial agreements where both financial security and performance assurance are required. The guarantee must comply with Saudi Arabian law, including Sharia principles and SAMA regulations, making it distinct from conventional guarantees in other jurisdictions. It provides beneficiaries with two layers of protection: a bank's commitment to pay a specified sum upon demand and assurance of the principal's performance of contractual obligations. The document is particularly relevant in the context of government contracts, major infrastructure projects, and significant commercial transactions in Saudi Arabia, where performance security is a regulatory requirement.
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1. Parties: Identification of the Guarantor Bank, Principal (party whose obligations are being guaranteed), and Beneficiary
2. Background: Context of the guarantee, including reference to the underlying contract or obligation being guaranteed
3. Definitions: Key terms used in the guarantee, including 'Guaranteed Amount', 'Expiry Date', and 'Guaranteed Obligations'
4. Guarantee: Core guarantee provisions, amount, and scope of the bank's commitment
5. Term and Validity: Duration of the guarantee, effective date, expiry conditions, and any extension provisions
6. Demands and Payments: Process and conditions for making demands under the guarantee, payment mechanisms, and timeframes
7. Reduction and Release: Conditions under which the guaranteed amount may be reduced and when the guarantee will be released
8. Representations and Warranties: Standard declarations by the parties regarding their capacity and authority
9. Assignment and Transfer: Restrictions on assignment or transfer of rights under the guarantee
10. Governing Law and Jurisdiction: Specification of Saudi law as governing law and relevant jurisdiction for disputes
11. Notices: Communication procedures and contact details for all parties
12. Execution: Signature blocks and execution formalities
1. Counter-Indemnity: Optional section where the Principal provides indemnity to the bank - used when required by bank policy
2. Security Provisions: Details of any collateral or security provided - included when the guarantee is secured
3. Multiple Beneficiaries: Provisions for handling multiple beneficiaries - used when there is more than one beneficiary
4. Step-In Rights: Rights of the bank to step into the underlying contract - included in complex project guarantees
5. Currency Provisions: Specific provisions for handling currency conversions - needed for international guarantees
6. Force Majeure: Provisions for handling extraordinary events - included in long-term guarantees
7. Partial Drawings: Provisions allowing partial claims under the guarantee - used when agreed by parties
1. Form of Demand: Standard format for making demands under the guarantee
2. Underlying Contract: Copy or key terms of the contract being guaranteed
3. Payment Instructions: Detailed banking and payment processing instructions
4. Required Documents: List of documents required for making a valid demand
5. Authorized Signatories: List of persons authorized to make demands or give instructions
6. Security Documents: If applicable, documents relating to any security or collateral provided
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Construction and Infrastructure
Oil and Gas
Manufacturing
Real Estate Development
Government and Public Sector
Defense and Military
Telecommunications
Healthcare
Education
Transportation and Logistics
Relevant Teams
Legal
Finance
Treasury
Risk Management
Compliance
Commercial
Operations
Project Management
Procurement
Corporate Finance
Contract Administration
Relevant Roles
Chief Financial Officer
Legal Counsel
Contract Manager
Project Director
Treasury Manager
Risk Manager
Compliance Officer
Commercial Director
Banking Relationship Manager
Corporate Finance Manager
Project Finance Manager
Business Development Director
Operations Director
Procurement Manager
Financial Controller
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