The Bid Bond Bank Guarantee is a crucial document in Malaysian tender processes, required when companies participate in significant commercial or government tenders. It provides financial security to the tender issuer, typically ranging from 2-5% of the bid value, ensuring that bidders maintain their commitment to the tender process. The guarantee is governed by Malaysian law, particularly the Financial Services Act 2013 and relevant Bank Negara Malaysia guidelines. This type of bank guarantee is commonly used in construction, infrastructure, and large-scale procurement projects, where it protects the tender issuer against bidders who might withdraw their bids or fail to proceed with the contract after being selected. The document must comply with local banking regulations and typically remains valid from the tender submission date until shortly after the expected tender award date.
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1. Bank Details and Reference: Header section containing the issuing bank's details, reference number, and date
2. Addressee Details: Full details of the beneficiary (tender issuer)
3. Guarantee Amount: Clear statement of the guaranteed sum in figures and words
4. Tender Reference: Details of the tender/bid being guaranteed, including tender reference number and title
5. Principal Identity: Details of the bidder/tenderer on whose behalf the guarantee is issued
6. Guarantee Period: Validity period of the guarantee including start and end dates
7. Claim Conditions: Terms and conditions under which the guarantee can be called upon
8. Payment Terms: Specifics of how payment will be made upon valid claim
9. Governing Law: Statement of Malaysian law as governing law
10. Execution Block: Authorized signatories section for the bank
1. Extension Clause: Optional clause regarding possibility of extending the guarantee validity period
2. Assignment Restriction: Clause prohibiting assignment of the guarantee, if required by bank policy
3. Counter Guarantee Reference: Reference to any counter-guarantee arrangements, if applicable for international tenders
4. Claim Period: Additional section specifying the period within which claims must be made after expiry, if different from standard terms
5. Digital Verification: Section for digital verification codes or methods, if the bank uses electronic guarantee systems
1. Tender Details Schedule: Detailed description of the tender project and requirements (if extensive)
2. Claim Procedures: Step-by-step procedures for making a claim under the guarantee
3. Form of Demand: Prescribed format for submitting a claim under the guarantee
4. Authentication Schedule: Details of authorized signatories and verification procedures for claims
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