The On Demand Bank Guarantee is a crucial financial instrument in Saudi Arabian commercial transactions, particularly used in construction contracts, government tenders, and international trade. It provides beneficiaries with immediate access to funds upon making a compliant demand, without needing to prove default or breach by the principal. The document must comply with Saudi Arabian Banking Control Law, SAMA regulations, and Islamic Shariah principles, while often incorporating international banking standards like URDG 758. This type of guarantee is preferred in Saudi Arabia due to its simplicity in enforcement and strong protection for beneficiaries. The guarantee amount is typically a percentage of the underlying contract value, and the document includes specific provisions for demand procedures, expiry conditions, and governing law clauses that reflect Saudi jurisdiction requirements.
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1. Parties: Identification of the Bank (Guarantor), the Applicant (Principal), and the Beneficiary
2. Definitions and Interpretation: Key terms used in the guarantee including Guarantee Amount, Expiry Date, and Governing Law
3. Guarantee Amount and Currency: Specific amount of the guarantee and currency denomination
4. Purpose of Guarantee: Clear statement of the underlying transaction or obligation being guaranteed
5. Demand Requirements: Specific conditions and format for making a demand under the guarantee
6. Payment Terms: Timeline and process for payment upon receipt of compliant demand
7. Expiry and Release: Terms regarding expiry date, return of guarantee, and release of obligations
8. Assignment and Transfer: Provisions regarding transferability of the guarantee
9. Governing Law and Jurisdiction: Confirmation of Saudi law application and jurisdiction of Saudi courts
10. Notices: Communication procedures between parties including acceptable methods and addresses
1. Counter-Guarantee Provisions: Required when there is a counter-guarantee from another bank, typically in international transactions
2. Electronic Presentation: Include when parties agree to accept electronic demands and communications
3. Force Majeure: Additional provisions for force majeure events affecting the guarantee
4. Language: Required when the guarantee is issued in multiple languages, specifying the prevailing version
5. Shariah Compliance Declaration: Explicit statement of Shariah compliance, required for certain Islamic banking institutions
6. SAMA Specific Requirements: Additional provisions required by SAMA for specific types of guarantees
1. Form of Demand: Template for making a compliant demand under the guarantee
2. Form of Counter-Guarantee: Standard format for counter-guarantee if applicable
3. Required Documents: List of supporting documents required with any demand
4. Authentication Procedures: Detailed procedures for verifying authenticity of demands
5. Contact Details: Complete contact information for all parties
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Construction and Infrastructure
Government and Public Sector
International Trade
Real Estate Development
Oil and Gas
Manufacturing
Telecommunications
Defense Contracting
Healthcare
Relevant Teams
Legal
Finance
Treasury
Compliance
Risk Management
Commercial Operations
Corporate Banking
Trade Finance
Islamic Banking
Project Management
Relevant Roles
Chief Financial Officer
Treasury Manager
Legal Counsel
Compliance Officer
Risk Manager
Contract Manager
Project Director
Commercial Director
Banking Relationship Manager
Corporate Finance Manager
Trade Finance Manager
Credit Risk Officer
Islamic Banking Specialist
Business Development Manager
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