The Performance Letter of Credit is a crucial financial instrument in Saudi Arabia's commercial landscape, particularly for large-scale projects and international contracts. This document is typically required when a project owner or employer needs a secure guarantee of performance from a contractor or service provider. The Performance Letter of Credit provides an independent undertaking from a bank to pay a specified amount if the contracted party fails to meet their obligations. Governed by Saudi Arabian law and regulated by the Saudi Arabian Monetary Authority (SAMA), these letters must comply with both international banking standards and Islamic Shariah principles. They are commonly used in construction projects, government contracts, and major commercial transactions where the stakes are high and the parties require robust performance security.
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1. Letter Reference and Date: Unique reference number and date of issuance of the Letter of Credit
2. Issuing Bank Details: Complete details of the bank issuing the Letter of Credit
3. Beneficiary Information: Full details of the party in whose favor the Letter of Credit is issued
4. Applicant Information: Complete details of the party requesting the Letter of Credit
5. Credit Amount: The maximum amount available under the Letter of Credit and currency
6. Validity Period: Effective date and expiry date of the Letter of Credit
7. Project Details: Description of the underlying project or contract being guaranteed
8. Drawing Conditions: Specific conditions that must be met for the beneficiary to draw on the Letter of Credit
9. Documentation Requirements: List of required documents for any drawing under the Letter of Credit
10. Governing Law and Jurisdiction: Specification of Saudi Arabian law and relevant jurisdiction
11. Shariah Compliance Statement: Declaration of compliance with Islamic banking principles
1. Partial Drawings Clause: Include when partial drawings are permitted under the Letter of Credit
2. Transfer Rights: Include when the Letter of Credit is transferable to other beneficiaries
3. Multiple Currency Provisions: Include when drawings can be made in different currencies
4. Counter-Guarantee Details: Include when there is a counter-guarantee from another bank
5. Force Majeure Provisions: Include specific force majeure terms when required by the underlying contract
6. Electronic Presentation Clause: Include when electronic presentation of documents is permitted
1. Schedule A - Form of Demand: Standard format for making a demand under the Letter of Credit
2. Schedule B - Project Contract Reference: Details or extract of the underlying contract being guaranteed
3. Schedule C - Required Documents Checklist: Detailed list of all documents required for drawing
4. Schedule D - Bank's Standard Terms and Conditions: General terms and conditions applicable to all Letters of Credit issued by the bank
5. Appendix 1 - SAMA Compliance Declaration: Declaration of compliance with Saudi Arabian Monetary Authority regulations
6. Appendix 2 - Authorized Signatories: List of authorized signatories for the beneficiary and their specimen signatures
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Construction and Infrastructure
Oil and Gas
Energy and Utilities
Manufacturing
Mining
Government and Public Sector
Real Estate Development
Telecommunications
Defense and Military Contracts
Engineering Services
International Trade
Relevant Teams
Legal
Finance
Treasury
Procurement
Project Management
Risk Management
Compliance
Commercial Operations
Islamic Banking
Trade Finance
Relevant Roles
Chief Financial Officer
Treasury Manager
Contract Manager
Project Director
Legal Counsel
Banking Relationship Manager
Trade Finance Manager
Risk Manager
Compliance Officer
Financial Controller
Project Manager
Commercial Director
Procurement Manager
Islamic Banking Specialist
Senior Business Analyst
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