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Retention Bank Guarantee

Retention Bank Guarantee Template for Austria

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Key Requirements PROMPT example:

Retention Bank Guarantee

"Need a Retention Bank Guarantee for a €2.5M construction project in Vienna, with the guarantee amount reducing by 50% after practical completion in March 2025, and the remainder expiring after the 24-month defects liability period."

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Document background
The Retention Bank Guarantee is a crucial document in construction and major project contracts under Austrian law, where it replaces the traditional practice of withholding a percentage of payment (retention money) to secure against defects. This type of guarantee is particularly important as it improves cash flow for contractors while maintaining security for project owners. The document outlines the bank's unconditional obligation to pay the guaranteed sum upon demand, typically ranging from 5% to 10% of the contract value. Used extensively in Austrian construction and infrastructure projects, the Retention Bank Guarantee must comply with specific requirements under the Austrian Civil Code (ABGB) and Banking Act (BWG). It includes essential details such as parties involved, guarantee amount, validity period, and conditions for claims.
Suggested Sections

1. Bank Details and Reference: Full name and address of the issuing bank, guarantee reference number, and date

2. Beneficiary Details: Full name and address of the party in whose favor the guarantee is issued

3. Principal Details: Full name and address of the party on whose behalf the guarantee is issued

4. Underlying Contract Reference: Details of the main contract for which the retention guarantee is issued, including contract number and date

5. Guarantee Amount: The maximum amount covered by the guarantee, stated in both numbers and words

6. Purpose of Guarantee: Specific description of what the guarantee covers (retention money for construction/delivery etc.)

7. Validity Period: Clear statement of when the guarantee becomes effective and when it expires

8. Payment Conditions: Terms under which the bank will make payment upon receiving a demand

9. Demand Requirements: Specific format and documentation required for making a valid demand under the guarantee

10. Governing Law and Jurisdiction: Explicit statement that Austrian law governs and specification of jurisdiction

Optional Sections

1. Reduction Clause: Used when the guarantee amount can be reduced over time according to specific milestones or conditions

2. Assignment Provisions: Include when the guarantee needs to be transferable to another beneficiary

3. Dispute Resolution: Detailed dispute resolution procedures, included for complex projects or when required by the underlying contract

4. Special Conditions: Any project-specific conditions or requirements that affect the guarantee's operation

5. Multiple Beneficiaries Clause: Include when there are multiple parties who can make a claim under the guarantee

6. Currency Provisions: Include for international projects where currency conversion might be relevant

Suggested Schedules

1. Form of Demand: Template for making a valid demand under the guarantee

2. Payment Schedule: If the guarantee amount reduces over time, a schedule showing the reduction timeline

3. Project Milestones: When the guarantee is linked to specific project milestones, a detailed list of these milestones

4. Authorization Documents: Copies of relevant authorization documents from the principal authorizing the bank to issue the guarantee

Authors

Alex Denne

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant Industries

Construction

Infrastructure

Manufacturing

Engineering

Real Estate Development

Energy

Industrial Projects

Transportation

Public Works

Commercial Development

Relevant Teams

Legal

Finance

Commercial

Procurement

Project Management

Risk Management

Treasury

Construction Management

Contract Administration

Relevant Roles

Project Manager

Construction Manager

Contract Administrator

Finance Director

Legal Counsel

Commercial Manager

Procurement Manager

Risk Manager

Treasury Manager

Banking Relationship Manager

Chief Financial Officer

Project Director

Construction Director

Claims Manager

Industries
Austrian Civil Code (ABGB - Allgemeines bürgerliches Gesetzbuch): Provides the basic legal framework for contracts, obligations, and guarantees in Austria, particularly §§ 880a-881 regarding guarantee contracts and §§ 1346-1367 concerning suretyship provisions
Austrian Commercial Code (UGB - Unternehmensgesetzbuch): Governs commercial transactions and business relationships, including specific provisions for banking transactions and commercial guarantees
Austrian Banking Act (BWG - Bankwesengesetz): Regulates banking operations and financial services, including the issuance of bank guarantees and related financial instruments
Austrian Construction Contract Law (Bauvertragsrecht): Relevant for retention guarantees in construction projects, including provisions about warranty periods and security retention
EU Payment Services Directive 2 (PSD2): European regulation affecting banking services and payment systems, which might impact the execution and processing of bank guarantees
Austrian Consumer Protection Act (KSchG - Konsumentenschutzgesetz): May be relevant if one party is a consumer, affecting the formal requirements and permissible contents of the guarantee
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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