Document background
The Contract Performance Guarantee is a fundamental security instrument in Austrian business practice, commonly used to protect parties against the risk of contractual non-performance. It is particularly relevant in scenarios involving significant commercial contracts, construction projects, or supply agreements where one party seeks financial security for the other party's performance obligations. The guarantee, regulated under Austrian law including the ABGB (Austrian Civil Code) and UGB (Commercial Code), typically amounts to 5-10% of the underlying contract value. This document becomes crucial when entering into substantial commercial agreements, particularly in sectors involving large-scale projects or significant financial commitments. The guarantee provides the beneficiary with quick access to funds in case of the principal's default, while also offering the principal an alternative to cash deposits or other forms of security.
