The Open Ended Bank Guarantee is a crucial financial instrument in Hong Kong's commercial landscape, particularly utilized in long-term projects, continuous business relationships, or where the duration of potential obligations cannot be predetermined. This document is essential when a beneficiary requires permanent security without the administrative burden of periodic renewals. It follows Hong Kong banking regulations and common law principles, incorporating specific provisions for demand mechanisms, payment obligations, and enforcement procedures. The guarantee typically includes robust protection mechanisms for the bank while providing the beneficiary with readily accessible security. It's commonly used in construction projects, trade finance, and long-term supply contracts, where the underlying obligations may extend indefinitely or where the exact duration of the required security is uncertain at the outset.

1. Parties: Identifies the Bank (Guarantor), the Beneficiary, and the Principal (the party whose obligations are being guaranteed)

2. Background: Sets out the context of the guarantee, including reference to the underlying transaction or relationship between the Principal and Beneficiary

3. Definitions: Defines key terms used throughout the guarantee, including 'Guaranteed Obligations', 'Demand', 'Business Day', etc.

4. Guarantee and Indemnity: Core section establishing the bank's primary obligation to pay and the scope of the guarantee

5. Payment Provisions: Details the mechanism for making demands, form of demands, and timing of payments

6. Independent Obligation: Establishes that the guarantee is independent from the underlying transaction and represents a primary obligation of the bank

7. Non-expiry Provisions: Specific provisions addressing the open-ended nature of the guarantee and any conditions for termination

8. Protected Transactions: Lists transactions and circumstances under which the guarantee remains valid

9. Bank's Rights and Protections: Sets out the bank's rights including right of recourse against the Principal

10. Representations and Warranties: Standard representations and warranties from all parties

11. Tax Provisions: Addresses tax implications and withholding requirements

12. Governing Law and Jurisdiction: Specifies Hong Kong law as governing law and jurisdiction for disputes