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On Demand Bank Guarantee Template for South Africa

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Key Requirements PROMPT example:

On Demand Bank Guarantee

"I need an On Demand Bank Guarantee for a construction project in Cape Town, with a guarantee amount of R15 million, valid until March 15, 2025, with the option for partial drawings and automatic reduction of 25% upon project milestone completion."

Document background
The On Demand Bank Guarantee is a crucial financial instrument in South African commercial transactions, providing security and risk mitigation for various business dealings. It is commonly used in construction projects, tender submissions, performance securities, and international trade transactions. The document creates an unconditional obligation for the issuing bank to pay upon receiving a compliant demand, without needing to verify default or breach. Under South African law, these guarantees must comply with specific banking regulations and financial sector requirements, including the Banks Act and Financial Sector Regulation Act. The guarantee typically specifies the maximum amount, validity period, and precise conditions for demanding payment, while maintaining independence from the underlying commercial contract.
Suggested Sections

1. Bank Details and Reference: Full details of the issuing bank, including registration number, branch, and reference number

2. Beneficiary Details: Complete identification of the party in whose favor the guarantee is issued

3. Principal/Applicant Details: Full details of the party on whose behalf the guarantee is being issued

4. Guarantee Amount: The maximum amount for which the bank guarantee is issued, in numbers and words

5. Underlying Transaction Reference: Reference to the primary contract or obligation that the guarantee is securing

6. Guarantee Terms: Core terms including the unconditional nature of the guarantee and payment obligations

7. Demand Requirements: Specific format and requirements for making a valid demand under the guarantee

8. Expiry Provisions: Clear statement of when and how the guarantee expires or terminates

9. Governing Law and Jurisdiction: Specification of South African law as governing law and jurisdiction for disputes

Optional Sections

1. Counter-Indemnity Reference: Reference to counter-indemnity when the bank requires backing from another financial institution

2. Transferability Clause: Include when the guarantee needs to be transferable to another beneficiary

3. Reduction Clause: Used when the guarantee amount can be reduced over time or upon certain events

4. Multiple Drawing Provisions: Required when multiple partial demands are to be allowed

5. Foreign Currency Provisions: Necessary when the guarantee involves foreign currency or exchange rate considerations

6. Electronic Presentation Clause: Include when demands can be made electronically

7. Force Majeure Clause: Optional protection for the bank in case of external events preventing performance

Suggested Schedules

1. Form of Demand: Template for the written demand to be submitted by the beneficiary

2. Payment Instructions: Detailed banking coordinates and payment procedures

3. Authentication Procedures: Specific requirements for verifying the authenticity of demands

4. Supporting Documents List: List of any additional documents required to be presented with a demand

Authors

Alex Denne

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

Relevant legal definitions




























Clauses




















Relevant Industries

Construction and Infrastructure

Real Estate Development

Mining and Resources

International Trade

Manufacturing

Energy and Utilities

Telecommunications

Government and Public Sector

Financial Services

Retail and Commercial Development

Relevant Teams

Legal

Finance

Treasury

Procurement

Commercial

Risk Management

Compliance

Operations

Project Management

Business Development

Relevant Roles

Chief Financial Officer

Treasury Manager

Financial Director

Contract Manager

Project Manager

Procurement Manager

Legal Counsel

Risk Manager

Commercial Director

Business Development Manager

Account Manager

Banking Relationship Manager

Compliance Officer

Finance Manager

Operations Director

Industries








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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