The Bank Financial Guarantee is a crucial financial instrument in Malaysian commercial practice, typically used to secure contractual obligations in various business transactions. It is particularly relevant in scenarios where a party requires financial security for performance obligations, tender submissions, or payment guarantees. The document, governed by Malaysian law and subject to oversight by Bank Negara Malaysia, establishes the bank's irrevocable commitment to pay a specified sum upon valid demand. This type of guarantee is commonly required in government contracts, construction projects, and international trade transactions, providing beneficiaries with a secure and readily enforceable financial backing. The guarantee's terms must comply with the Financial Services Act 2013 and related Malaysian banking regulations, making it a highly regulated and standardized document despite its adaptability to various commercial contexts.
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1. Parties: Identification of the Bank (Guarantor), the Principal (party whose obligations are being guaranteed), and the Beneficiary
2. Background: Context of the guarantee, including reference to the underlying transaction or agreement
3. Definitions: Key terms used in the guarantee, including 'Guaranteed Sum', 'Guarantee Period', 'Demand Notice', etc.
4. Guarantee: Core guarantee provision, stating the bank's unconditional and irrevocable undertaking to pay
5. Guaranteed Sum: Specific amount of the guarantee and currency
6. Duration: Validity period of the guarantee, including commencement and expiry dates
7. Demand Procedure: Process and requirements for making a valid demand under the guarantee
8. Payment Terms: Conditions and timeframe for payment upon receipt of a valid demand
9. Bank's Rights and Obligations: Specific rights, obligations, and limitations of the bank's liability
10. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction for disputes
1. Counter-Indemnity: Required when the Principal provides indemnity to the bank; typically in a separate document but may be included here
2. Assignment: Include if the guarantee can be assigned or transferred
3. Multiple Beneficiaries: Required when there is more than one beneficiary
4. Reduction Clause: Include if the guarantee amount can be reduced over time
5. Language: Required if the guarantee needs to be in multiple languages
6. Electronic Presentation: Include if electronic demands are permitted
7. Force Majeure: Optional clause dealing with extraordinary events affecting the guarantee
8. Anti-Money Laundering Compliance: Include if specified by the bank's compliance requirements
1. Form of Demand: Template for making a valid demand under the guarantee
2. Underlying Agreement Details: Summary or extract of the main agreement being guaranteed
3. Authorized Signatories: List of persons authorized to make demands under the guarantee
4. Bank's Standard Terms and Conditions: Standard terms applicable to all guarantees issued by the bank
5. Supporting Documents Requirements: List of documents required to accompany any demand
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