The Domestic Bank Guarantee is a crucial financial instrument in Malaysian commercial transactions, providing security and risk mitigation for various business arrangements. It is commonly used in construction projects, tender submissions, performance obligations, and advance payment security. The document, regulated under Malaysian banking laws and supervised by Bank Negara Malaysia, must comply with local banking regulations and practices. The guarantee typically specifies the maximum liability amount, validity period, conditions for demand, and payment terms. It serves as a binding commitment from a bank to pay a specified sum to the beneficiary upon receiving a compliant demand, subject to the terms and conditions outlined in the guarantee document. This type of guarantee is particularly important in domestic commercial transactions where parties seek reliable financial security from a Malaysian banking institution.

1. Parties: Identification of the Bank (Guarantor), the Principal (party requesting the guarantee), and the Beneficiary

2. Background: Brief recitals explaining the context and underlying transaction necessitating the guarantee

3. Definitions: Key terms used in the guarantee document

4. Guarantee and Undertaking: Core section detailing the bank's guarantee commitment and maximum liability amount

5. Duration and Validity: Specification of the guarantee period, expiry date, and any automatic extension provisions

6. Demand Requirements: Procedures and conditions for making a valid demand under the guarantee

7. Payment Terms: Timeline and method of payment upon receipt of a valid demand

8. Reduction and Release: Circumstances under which the guarantee amount may be reduced or the bank released from obligations

9. Assignment and Transfer: Provisions regarding transferability of the guarantee

10. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction of Malaysian courts

11. Notices: Communication procedures and contact details for all parties