The Bank Guarantee Performance Bond is a crucial financial instrument in the UAE business landscape, particularly in construction, infrastructure, and large commercial projects. It is issued when a project owner requires security for a contractor's performance obligations under a primary contract. The document, governed by UAE Federal Laws and Central Bank regulations, typically amounts to 10% of the contract value and remains valid throughout the contract period plus any warranty period. The bond serves as a risk mitigation tool, allowing the beneficiary to make a demand for payment if the principal fails to meet their contractual obligations. This type of guarantee is particularly important in the UAE market where performance bonds are standard requirements for major projects and are often required as part of tender submissions or contract awards.
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1. Identification of Parties: Details of the Bank (Guarantor), the Principal (Contractor/Service Provider), and the Beneficiary (Client)
2. Recitals: Background information including reference to the underlying contract and basis for issuing the guarantee
3. Definitions: Key terms used in the guarantee including Contract, Guaranteed Sum, Expiry Date
4. Guarantee Amount: Clear statement of the maximum guaranteed sum in both figures and words
5. Scope of Guarantee: Description of the performance obligations being guaranteed
6. Duration and Validity: Effective date, expiry date, and any automatic extension provisions
7. Demand Requirements: Process and conditions for making a claim under the guarantee
8. Payment Terms: Timeline and method of payment upon valid demand
9. Reduction Provisions: Conditions under which the guarantee amount may be reduced
10. Governing Law and Jurisdiction: Specification of UAE law and relevant courts
1. Assignment Provisions: Include when assignment of the guarantee rights needs to be addressed
2. Language Preference: Include when dual language versions are provided, specifying which version prevails
3. Force Majeure: Include for longer-term guarantees where force majeure events need to be addressed
4. Anti-Money Laundering Compliance: Include when required by specific bank policies or regulatory requirements
5. Sharia Compliance Statement: Include when the guarantee needs to explicitly comply with Islamic banking principles
6. Step-In Rights: Include when the bank requires right to step into the underlying contract
1. Copy of Underlying Contract: Referenced contract being guaranteed (usually referenced but not attached)
2. Specimen Signature List: Authorized signatories for making demands under the guarantee
3. Form of Demand: Template for submitting claims under the guarantee
4. Performance Milestones: If guarantee amount reduces based on project milestones
Relevant legal definitions
Guarantee
Guarantor
Principal
Beneficiary
Contract
Guaranteed Amount
Guaranteed Obligations
Demand
Business Day
Expiry Date
Effective Date
Counter-Guarantee
Force Majeure
Governing Law
Performance Default
Project
Security
Substantial Completion
Underlying Contract
Valid Claim
Warranty Period
Working Hours
Maximum Liability
Termination Event
Authorized Representative
Payment Period
Claim Notice
Contract Price
Completion Certificate
Default Interest Rate
Guarantor
Principal
Beneficiary
Contract
Guaranteed Amount
Guaranteed Obligations
Demand
Business Day
Expiry Date
Effective Date
Counter-Guarantee
Force Majeure
Governing Law
Performance Default
Project
Security
Substantial Completion
Underlying Contract
Valid Claim
Warranty Period
Working Hours
Maximum Liability
Termination Event
Authorized Representative
Payment Period
Claim Notice
Contract Price
Completion Certificate
Default Interest Rate
Clauses
Parties and Capacity
Recitals
Definitions
Guarantee Issuance
Scope of Guarantee
Amount and Currency
Duration and Validity
Demand and Payment
Bank's Undertaking
Reduction Provisions
Claims Procedure
Assignment
Amendments
Notices
Compliance with Laws
Anti-Money Laundering
Governing Law
Jurisdiction
Language
Severability
Entire Agreement
Expiry and Return
Force Majeure
Waiver
Indemnification
Counterparts
Independent Obligations
No Set-off
Costs and Expenses
Recitals
Definitions
Guarantee Issuance
Scope of Guarantee
Amount and Currency
Duration and Validity
Demand and Payment
Bank's Undertaking
Reduction Provisions
Claims Procedure
Assignment
Amendments
Notices
Compliance with Laws
Anti-Money Laundering
Governing Law
Jurisdiction
Language
Severability
Entire Agreement
Expiry and Return
Force Majeure
Waiver
Indemnification
Counterparts
Independent Obligations
No Set-off
Costs and Expenses
Relevant Industries
Banking and Financial Services
Construction and Infrastructure
Real Estate Development
Oil and Gas
Energy and Utilities
Government and Public Sector
Manufacturing
Telecommunications
Healthcare
Hospitality and Tourism
Relevant Teams
Legal
Finance
Treasury
Project Management
Procurement
Risk Management
Commercial
Operations
Compliance
Business Development
Relevant Roles
Chief Financial Officer
Finance Director
Project Manager
Contract Manager
Legal Counsel
Treasury Manager
Risk Manager
Commercial Director
Procurement Manager
Construction Manager
Bank Relationship Manager
Company Secretary
Operations Director
Compliance Officer
Business Development Manager
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