The Deferred Payment Guarantee is a crucial financial instrument in Indian commercial transactions, particularly utilized when buyers require extended payment terms for significant purchases or project financing. This document, governed by Indian law and RBI regulations, enables banks to guarantee future payments to sellers/beneficiaries according to predetermined schedules, typically spanning several months or years. It's commonly used in international trade, infrastructure projects, and large equipment purchases, providing security to sellers while offering payment flexibility to buyers. The guarantee's structure must comply with Indian Contract Act provisions and RBI guidelines on bank guarantees, including specific requirements for invocation, validity periods, and documentation. This instrument helps facilitate large commercial transactions by mitigating payment risks and providing financial security to all parties involved.
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1. Parties: Identifies the three key parties: the Bank (Guarantor), the Applicant (Principal Debtor), and the Beneficiary
2. Background: Details of the underlying transaction or contract necessitating the guarantee
3. Definitions: Defines key terms used in the guarantee document
4. Guarantee Amount: Specifies the maximum amount of the guarantee and currency
5. Validity Period: States the commencement and expiry dates of the guarantee
6. Payment Terms: Details of when and how payments will be made, including deferred payment schedule
7. Invocation Conditions: Specific conditions under which the guarantee can be invoked by the beneficiary
8. Notice Requirements: Procedures for serving notices of demand or other communications
9. Bank's Obligations: Scope and extent of the bank's obligations under the guarantee
10. Governing Law and Jurisdiction: Specifies applicable law and courts having jurisdiction
11. Force Majeure: Circumstances excusing performance of obligations
1. Counter Guarantee: Required when there's a counter guarantee from another bank or financial institution
2. Assignment Clause: Include when the guarantee needs to be assignable to third parties
3. Partial Claims: Include when partial claims against the guarantee are to be permitted
4. Language: Required for international transactions specifying the prevailing language
5. Anti-Money Laundering Compliance: Include for high-value transactions or when dealing with international parties
6. Multiple Beneficiaries: Include when the guarantee has more than one beneficiary
7. Step-in Rights: Include when the bank has rights to step into the underlying contract
1. Payment Schedule: Detailed schedule of deferred payments including dates and amounts
2. Form of Demand: Prescribed format for making a demand under the guarantee
3. Underlying Contract Details: Summary or extract of the main contract being guaranteed
4. Documentation Requirements: List of documents required for guarantee invocation
5. Specimen Signatures: Authorized signatures of relevant parties
6. Bank Details: Banking information for all parties for payment purposes
Relevant legal definitions
Guarantee Amount
Applicant
Beneficiary
Business Day
Claim Notice
Counter Guarantee
Deferred Payment Schedule
Default Event
Demand
Effective Date
Expiry Date
Force Majeure Event
Guarantee Fee
Guaranteed Obligations
Invocation Notice
Material Adverse Change
Payment Date
Payment Installment
Principal Debt
RBI
Relevant Jurisdiction
Security
Underlying Contract
Working Day
Event of Default
Authorized Representative
Bank
Claim Period
Default Interest Rate
Enforcement Event
Guarantee Period
Interest Payment Date
Maximum Liability
Notice
Payment Obligation
Permitted Assignment
Reference Rate
Stamping Requirements
Applicant
Beneficiary
Business Day
Claim Notice
Counter Guarantee
Deferred Payment Schedule
Default Event
Demand
Effective Date
Expiry Date
Force Majeure Event
Guarantee Fee
Guaranteed Obligations
Invocation Notice
Material Adverse Change
Payment Date
Payment Installment
Principal Debt
RBI
Relevant Jurisdiction
Security
Underlying Contract
Working Day
Event of Default
Authorized Representative
Bank
Claim Period
Default Interest Rate
Enforcement Event
Guarantee Period
Interest Payment Date
Maximum Liability
Notice
Payment Obligation
Permitted Assignment
Reference Rate
Stamping Requirements
Clauses
Guarantee Issuance
Payment Obligations
Deferred Payment Terms
Invocation Rights
Default Events
Notice Requirements
Bank's Rights and Obligations
Representations and Warranties
Indemnification
Assignment and Transfer
Force Majeure
Governing Law
Jurisdiction
Dispute Resolution
Amendments
Severability
Termination
Confidentiality
Notices
Costs and Expenses
Stamp Duty
Regulatory Compliance
Counter Guarantee
Set-off Rights
Waiver
Time of Essence
Further Assurance
Entire Agreement
Anti-Money Laundering
Documentation Requirements
Payment Obligations
Deferred Payment Terms
Invocation Rights
Default Events
Notice Requirements
Bank's Rights and Obligations
Representations and Warranties
Indemnification
Assignment and Transfer
Force Majeure
Governing Law
Jurisdiction
Dispute Resolution
Amendments
Severability
Termination
Confidentiality
Notices
Costs and Expenses
Stamp Duty
Regulatory Compliance
Counter Guarantee
Set-off Rights
Waiver
Time of Essence
Further Assurance
Entire Agreement
Anti-Money Laundering
Documentation Requirements
Relevant Industries
Banking and Financial Services
International Trade
Infrastructure Development
Manufacturing
Construction
Energy
Telecommunications
Real Estate
Mining
Heavy Industries
Relevant Teams
Legal
Finance
Treasury
Risk Management
Compliance
International Trade
Corporate Banking
Credit
Commercial Operations
Project Finance
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Bank Relationship Manager
Trade Finance Manager
Project Finance Manager
Legal Counsel
Commercial Director
Risk Manager
Compliance Officer
Credit Manager
Corporate Banking Officer
International Trade Specialist
Contract Administrator
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