Document background
The Performance Letter of Guarantee is a crucial financial instrument in Austrian commercial practice, typically used in construction, infrastructure, and other major projects where performance security is required. This document is issued by a bank at the request of a principal (usually a contractor) in favor of a beneficiary (usually a project owner) to guarantee the principal's performance obligations under a primary contract. The guarantee provides financial security up to a specified amount and includes specific conditions for claims, typically following Austrian banking practices and civil law requirements. The Performance Letter of Guarantee must comply with Austrian legislation, particularly the Civil Code (ABGB) and Banking Act (BWG), and typically remains valid until the completion of the guaranteed performance or a specified expiry date.
