Financial Performance Guarantee Template for Germany

The Financial Performance Guarantee is a crucial financial security instrument used in German commercial practice to provide assurance for performance obligations. It is commonly employed in various business contexts, from construction projects to supply contracts, where one party seeks security for the performance obligations of another. Under German law, these guarantees must comply with specific formal requirements set out in the BGB and banking regulations. The document typically specifies the guaranteed amount, conditions for calling the guarantee, and payment obligations. It's particularly important in international trade and large-scale projects where parties seek robust performance security mechanisms. The guarantee can be either accessory (dependent on the underlying obligation) or independent (abstract guarantee), with the latter being more common in commercial practice.

1. Parties: Identification of the Guarantor, Principal Debtor, and Beneficiary with full legal names and addresses

2. Background: Context of the guarantee, reference to the underlying obligation or transaction being guaranteed

3. Definitions: Key terms used throughout the guarantee, including 'Guaranteed Obligations', 'Guarantee Amount', 'Expiry Date'

4. Guarantee: Core guarantee provisions, including the scope and nature of the guarantee obligation

5. Maximum Liability: Specification of the maximum amount covered by the guarantee

6. Duration: Term of the guarantee, including effective date and expiry conditions

7. Demand Requirements: Formal requirements for making a valid demand under the guarantee

8. Payment Terms: Timeline and process for payment upon valid demand

9. Guarantor's Rights and Obligations: Detailed provisions regarding the guarantor's position, including any defenses or rights of recourse

10. Representations and Warranties: Standard declarations by the guarantor regarding capacity and authority

11. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction for disputes

12. Notices: Process and requirements for formal communications between parties

13. Execution: Signature blocks and execution requirements