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Advance Performance Guarantee

Advance Performance Guarantee Template for Singapore

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Key Requirements PROMPT example:

Advance Performance Guarantee

"Need an Advance Performance Guarantee for a Singapore construction project worth SGD 5 million, with our bank (DBS) as guarantor, valid until March 2025, with step-in rights included."

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Document background
An Advance Performance Guarantee is commonly used in Singapore's construction, infrastructure, and large-scale project sectors to provide security for advance payments and performance obligations. It serves as a risk mitigation tool where substantial upfront payments or critical performance requirements are involved. The guarantee, governed by Singapore law, typically amounts to 5-20% of the contract value and remains valid throughout the project duration plus a defects liability period. This instrument is particularly important in Singapore's sophisticated financial and construction markets, where it provides beneficiaries with readily accessible security without the need for litigation.
Suggested Sections

1. Parties: Identifies the guarantor, principal obligor, and beneficiary

2. Background: Explains the underlying transaction and purpose of the guarantee

3. Definitions: Defines key terms used throughout the guarantee

4. Guarantee and Indemnity: Core obligations of the guarantor

5. Amount and Scope: Specifies the guaranteed sum and extent of coverage

6. Duration: Validity period of the guarantee

7. Demand Requirements: Process and conditions for making claims

Optional Sections

1. Counter-Indemnity: Additional security provisions required from the principal obligor, typically used for high-value guarantees or high-risk transactions

2. Step-In Rights: Rights of guarantor to take over principal's obligations, commonly included in construction or project finance guarantees

3. Assignment Provisions: Rules regarding transfer of guarantee rights, included when transferability might be required

Suggested Schedules

1. Form of Demand: Template for making claims under the guarantee

2. Underlying Contract Details: Summary of the principal contract being guaranteed

3. Payment Schedule: Details of guarantee amounts if they vary over time or are linked to project milestones

4. Corporate Authorizations: Evidence of authority to issue guarantee (for corporate guarantors)

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions


















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Industries

Contract Law of Singapore: Fundamental law governing contracts in Singapore, based on English common law principles, which forms the basic framework for performance guarantees

Banking Act (Chapter 19): Regulates banking institutions in Singapore, particularly relevant when banks are involved in issuing performance guarantees

Securities and Futures Act (Chapter 289): Governs financial instruments and securities, which may be relevant for certain types of performance guarantees

Unfair Contract Terms Act (Chapter 396): Controls the use of unfair terms in contracts, ensuring the guarantee terms are fair and enforceable

Building and Construction Industry Security of Payment Act: Framework for payment security in the construction industry, relevant for construction-related performance guarantees

Companies Act (Chapter 50): Relevant when dealing with corporate guarantors, governing their capacity to provide guarantees

MAS Guidelines: Regulatory guidelines issued by the Monetary Authority of Singapore affecting financial institutions and guarantee instruments

Doctrine of Consideration: Legal principle requiring value exchange for contract validity, essential for guarantee enforcement

Contracts (Rights of Third Parties) Act: Governs third-party rights in contractual arrangements, important for guarantee beneficiaries

Bocotra Construction Case Law: Key precedent (1995) establishing principles for performance bonds and guarantees in Singapore

Arab Bank Corp Case Law: Important case (1997) defining the nature of on-demand guarantees in Singapore

JBE Properties Case Law: Significant case (2010) regarding the enforcement of performance guarantees

URDG 758: Uniform Rules for Demand Guarantees, international standards for guarantee instruments

ICC Guidelines: International Chamber of Commerce guidelines providing international standards for guarantees

MAS Notice 612: Specific regulatory notice affecting banks' involvement in guarantee instruments

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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