The Performance Guarantee In Tender is a crucial document in Indian tender processes, required when participating in significant commercial or public procurement tenders. It is typically demanded by government departments, public sector undertakings, or large private organizations to ensure serious participation in the tender process. The guarantee amount usually ranges from 2% to 10% of the tender value, depending on the project scope and requirements. This document becomes particularly important in high-value tenders where the issuing authority needs financial security against potential default by the bidder. Under Indian law, these guarantees are governed by the Banking Regulation Act, Indian Contract Act, and specific RBI guidelines, making them legally enforceable financial commitments. The document includes specific details about the tender, parties involved, guarantee amount, validity period, and invocation conditions.
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1. Parties: Identifies the three key parties: the Bank (Guarantor), the Principal (Tenderer/Bidder), and the Beneficiary (Tender issuing authority)
2. Background: Details of the tender, reference numbers, and context of why the guarantee is being issued
3. Definitions: Key terms used in the guarantee document including Guarantee Amount, Tender, Validity Period, etc.
4. Guarantee Amount: Specific amount of the guarantee in figures and words
5. Scope of Guarantee: Details of what the guarantee covers and the conditions under which it can be invoked
6. Duration and Validity: Effective date, expiry date, and claim period of the guarantee
7. Invocation Conditions: Specific conditions and process for invoking the guarantee
8. Payment Terms: Terms and timeline for payment upon invocation
9. Bank's Undertaking: Bank's commitment to honor the guarantee without contestation
10. Jurisdiction and Governing Law: Applicable law and courts having jurisdiction
1. Extension Provisions: Used when there's a possibility of extending the guarantee validity
2. Multiple Beneficiaries Clause: Required when the tender involves multiple beneficiaries
3. Assignment Restrictions: Added when specific restrictions on assignment of the guarantee are needed
4. Force Majeure Provisions: Included for high-value guarantees to address unforeseen circumstances
5. Demand Reduction Clause: Used when partial reduction of guarantee amount is permitted
6. Language Governing Clause: Added when guarantee might be used in multiple jurisdictions
7. Electronic Presentation Clause: Required when electronic invocation is permitted
1. Schedule 1 - Form of Demand Notice: Standard format for beneficiary to make a demand under the guarantee
2. Schedule 2 - Copy of Tender Notice: Reference copy of the original tender notice/document
3. Schedule 3 - Authority Documents: Documents proving authority of signatories
4. Appendix A - Bank Details: Banking details for guarantee operations and payments
5. Appendix B - Communication Protocol: Specified means and format of communication between parties
Relevant legal definitions
Beneficiary
Bank
Principal
Tender
Tender Documents
Guarantee Amount
Validity Period
Claim Period
Demand Notice
Business Day
Effective Date
Expiry Date
Force Majeure Event
Governing Law
Invocation
Maximum Liability
Tender Reference Number
Project
Authorized Signatory
Bank Account
Contract
Bid
Bid Security
Performance Security
Notice
Working Hours
Applicable Law
RBI Guidelines
Relevant Jurisdiction
Default Event
Extension Period
Original Guarantee
Payment Date
Tender Conditions
Tender Authority
Bank
Principal
Tender
Tender Documents
Guarantee Amount
Validity Period
Claim Period
Demand Notice
Business Day
Effective Date
Expiry Date
Force Majeure Event
Governing Law
Invocation
Maximum Liability
Tender Reference Number
Project
Authorized Signatory
Bank Account
Contract
Bid
Bid Security
Performance Security
Notice
Working Hours
Applicable Law
RBI Guidelines
Relevant Jurisdiction
Default Event
Extension Period
Original Guarantee
Payment Date
Tender Conditions
Tender Authority
Clauses
Parties Identification
Recitals
Definitions
Guarantee Amount
Scope of Guarantee
Duration and Validity
Payment Obligations
Invocation Rights
Notice Requirements
Bank's Undertaking
Assignment
Amendment
Force Majeure
Dispute Resolution
Governing Law
Jurisdiction
Stamp Duty
Severability
Entire Agreement
Communication
Multiple Counterparts
Authority and Capacity
Extension
Reduction
Waiver
Indemnification
Confidentiality
Expenses
Electronic Execution
Language
Recitals
Definitions
Guarantee Amount
Scope of Guarantee
Duration and Validity
Payment Obligations
Invocation Rights
Notice Requirements
Bank's Undertaking
Assignment
Amendment
Force Majeure
Dispute Resolution
Governing Law
Jurisdiction
Stamp Duty
Severability
Entire Agreement
Communication
Multiple Counterparts
Authority and Capacity
Extension
Reduction
Waiver
Indemnification
Confidentiality
Expenses
Electronic Execution
Language
Relevant Industries
Construction
Infrastructure
Public Procurement
Energy
Telecommunications
Defense
Healthcare
Information Technology
Manufacturing
Transportation
Mining
Utilities
Real Estate Development
Environmental Services
Relevant Teams
Legal
Finance
Procurement
Commercial
Treasury
Risk Management
Business Development
Operations
Company Secretarial
Project Management
Relevant Roles
Procurement Manager
Tender Manager
Contract Administrator
Legal Counsel
Chief Financial Officer
Bank Relationship Manager
Bid Manager
Project Director
Commercial Manager
Risk Manager
Treasury Manager
Company Secretary
Business Development Manager
Operations Director
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