Bid Bond Tender Guarantee for India

Bid Bond Tender Guarantee Template for India

A legally binding financial instrument issued by a bank or financial institution under Indian law, guaranteeing the tender issuing authority that the bidder will honor their bid commitments. This document serves as security against the risk of the bidder withdrawing or modifying their bid during the bid validity period, refusing to accept the contract if awarded, or failing to furnish the required performance security. The guarantee is governed by Indian contract law, banking regulations, and public procurement rules, providing the beneficiary with the right to claim the guaranteed amount if the bidder defaults on their tender obligations.

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What is a Bid Bond Tender Guarantee?

The Bid Bond Tender Guarantee is a crucial document in Indian procurement processes, required by public and private sector organizations to ensure serious participation in tender proceedings. It represents a bank's unconditional and irrevocable commitment to pay a specified sum to the tender issuing authority if the bidder fails to fulfill their tender obligations. The document, governed by Indian law and banking regulations, typically amounts to 1-5% of the tender value and remains valid throughout the bid evaluation period. It includes specific details about the tender, parties involved, guarantee amount, validity period, and claim procedures. This type of guarantee is particularly important in high-value tenders and public procurement where it serves as a risk mitigation tool against non-serious bidders and potential defaults.

What sections should be included in a Bid Bond Tender Guarantee?

1. Parties: Identifies the three key parties: (1) the Bank/Financial Institution issuing the guarantee, (2) the Beneficiary (tender issuing authority), and (3) the Principal (bidder)

2. Reference Details: Specific details of the tender including tender number, date, and project description

3. Guarantee Amount: The specific amount of the guarantee in numbers and words

4. Recitals: Background of the tender and requirement for the guarantee

5. Guarantee Terms: Core terms including conditions for invocation, payment obligations, and bank's commitment

6. Validity Period: Duration of the guarantee including start date and expiry date

7. Claim Procedure: Process and timeframe for making claims under the guarantee

8. Non-Assignment Clause: Prohibition on transfer or assignment of the guarantee

9. Governing Law and Jurisdiction: Applicable law and courts having jurisdiction

10. Notice Details: Communication addresses and methods for all parties

What sections are optional to include in a Bid Bond Tender Guarantee?

1. Extension Clause: Used when there's a possibility of tender evaluation period extending beyond initial validity

2. Counter Guarantee: Required when the guarantee is issued by a bank branch different from the bidder's bank

3. Digital/Electronic Execution: Required for e-tender submissions or when digital execution is permitted

4. Foreign Currency Provisions: Required when the bid bond is issued in foreign currency for international tenders

5. Multiple Beneficiary Clause: Used when there are multiple government agencies/entities as beneficiaries

6. Step-in Rights: Optional clause allowing other banks to step in and honor the guarantee

7. Dispute Resolution: Detailed arbitration clause when preferred over court jurisdiction

What schedules should be included in a Bid Bond Tender Guarantee?

1. Schedule 1 - Tender Details: Complete details of the tender including specifications and requirements

2. Schedule 2 - Bank Details: Banking information including IFSC code, branch details, and contact information

3. Schedule 3 - Form of Demand: Prescribed format for making a demand under the guarantee

4. Appendix A - Board Resolution: Copy of board resolution authorizing the bid submission and guarantee

5. Appendix B - Power of Attorney: Authorization documents for signatories

6. Appendix C - KYC Documents: Required KYC documents of the bidder as per banking regulations

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

Jurisdiction

India

Publisher

Genie AI

Document Type

Bank Guarantee

Sector

Banking

Cost

Free to use
Clauses
Relevant Industries

Infrastructure & Construction

Defense & Aerospace

Energy & Utilities

Public Sector Undertakings

Transportation & Logistics

Healthcare & Pharmaceuticals

Information Technology

Manufacturing

Telecommunications

Mining & Resources

Real Estate Development

Environmental Services

Relevant Teams

Legal

Finance

Procurement

Treasury

Risk Management

Commercial

Business Development

Compliance

Project Management

Corporate Secretarial

Relevant Roles

Procurement Manager

Tender Manager

Legal Counsel

Contract Manager

Bid Manager

Treasury Manager

Chief Financial Officer

Company Secretary

Risk Manager

Project Director

Business Development Manager

Commercial Manager

Banking Relationship Manager

Compliance Officer

Finance Director

Industries
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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