The Business Bank Guarantee is a crucial financial instrument in Saudi Arabia's commercial landscape, issued by banks to provide financial security in business transactions. It is commonly used when companies need to demonstrate financial capability or security for contracts, tenders, or performance obligations. The document must comply with Saudi Arabian Monetary Authority (SAMA) regulations, Shariah law principles, and the Banking Control Law (Royal Decree No. M/5). This guarantee type is particularly important in government contracts, construction projects, and international trade, where it serves as a risk mitigation tool. The document specifies the guaranteed amount, validity period, claim conditions, and includes provisions for both conventional and Islamic banking requirements, making it suitable for various commercial applications within the Saudi Arabian jurisdiction.
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1. Parties: Identification of the Bank (Guarantor), the Applicant (Principal), and the Beneficiary
2. Background: Context of the underlying commercial transaction necessitating the guarantee
3. Definitions: Key terms used in the guarantee document
4. Guarantee Amount: Specific amount of the guarantee in numbers and words
5. Scope of Guarantee: Detailed description of the bank's obligations and extent of guarantee coverage
6. Duration and Validity: Effective date, expiry date, and claim period of the guarantee
7. Demand Requirements: Procedure and conditions for making a claim under the guarantee
8. Payment Terms: Timeline and method of payment upon valid demand
9. Governing Law and Jurisdiction: Specification of Saudi law and relevant courts
10. Notices: Communication procedures between parties
11. Execution: Signature blocks and execution requirements
1. Counter-Indemnity: Terms of applicant's obligation to indemnify the bank, used when required by bank policy
2. Islamic Finance Compliance: Specific provisions ensuring Shariah compliance, used when strictly following Islamic banking principles
3. Assignment Restrictions: Provisions restricting or permitting assignment of rights, used in transferable guarantees
4. Automatic Reduction Clauses: Provisions for graduated reduction of guarantee amount, used in performance guarantees
5. Force Majeure: Provisions for unforeseen circumstances, used in longer-term guarantees
6. Language Precedence: Clause specifying prevailing language version, used when guarantee is bilingual
7. Documentary Requirements: Specific documents required for claim, used in conditional guarantees
1. Form of Demand: Template for making a valid demand under the guarantee
2. Underlying Contract Details: Summary or extract of the primary contract being guaranteed
3. Authorized Signatories: List of persons authorized to make demands under the guarantee
4. Fee Schedule: Details of bank charges and fees applicable
5. Supporting Documents: List of required supporting documents for guarantee issuance
Relevant legal definitions
Clauses
Relevant Industries
Banking & Financial Services
Construction & Infrastructure
International Trade
Manufacturing
Oil & Gas
Real Estate Development
Government & Public Sector
Telecommunications
Defense Contracting
Retail & Commercial
Relevant Teams
Legal
Finance
Treasury
Commercial
Risk Management
Compliance
Procurement
Project Management
Business Development
Corporate Governance
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Commercial Director
Contract Manager
Legal Counsel
Banking Relationship Manager
Risk Manager
Compliance Officer
Project Manager
Procurement Manager
Company Secretary
Business Development Director
Financial Controller
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