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A Performance Bond Demand Letter is a critical document used in Saudi Arabian commercial and construction projects when a contractor or service provider fails to meet their contractual obligations. This document is particularly important in the Saudi Arabian market, where performance bonds are mandatory for government contracts and commonly required in private sector projects. The demand letter must be carefully drafted to comply with both Saudi banking regulations and Shariah law principles, including specific requirements for format, content, and authentication. It typically contains detailed information about the underlying contract, the nature of the default, and the amount being claimed. The document is used to trigger the bank's obligation to pay under the performance bond, providing financial security to project owners in cases of contractor default.

1. Letter Header: Full letterhead details including sender's company name, address, and date

2. Addressee Details: Complete details of the bank/guarantor including branch details and address

3. Reference Information: Performance Bond number, underlying contract reference, and any relevant project details

4. Formal Demand Statement: Clear and unequivocal statement making demand under the performance bond

5. Default Description: Brief description of the contractor's default or breach triggering the demand

6. Amount Demanded: Specific amount being claimed, not exceeding the bond value

7. Payment Instructions: Clear banking details and instructions for payment

8. Authentication: Authorized signature block with company stamp as required under Saudi law