Guarantee And Indemnity Agreement Template for Saudi Arabia

The Guarantee And Indemnity Agreement is a crucial document in Saudi Arabian commercial and financial transactions, used when one party (the guarantor) agrees to secure the obligations of another party (the principal debtor) to a third party (the beneficiary). This document is essential in various commercial contexts, from securing bank facilities to supporting commercial contracts, and must be structured to comply with Islamic Sharia principles and Saudi Arabian law. The agreement includes detailed provisions on the scope of the guarantee, demand mechanisms, and enforcement procedures, all aligned with Saudi Arabian regulatory requirements and market practice. It's particularly important in project finance, commercial lending, and large-scale commercial transactions where additional security is required to support primary obligations.

1. Parties: Identification of the Guarantor(s), Principal Debtor, and Beneficiary with full legal names and addresses

2. Background: Context of the underlying obligation and relationship between parties, including reference to the principal agreement being guaranteed

3. Definitions: Key terms used throughout the agreement, including 'Guaranteed Obligations', 'Principal Agreement', and Islamic finance-specific terms

4. Guarantee and Indemnity: Core provisions detailing the scope of the guarantee and indemnity obligations, structured to comply with Sharia principles

5. Representations and Warranties: Guarantor's confirmations regarding capacity, authority, and Sharia compliance

6. Nature of Guarantee: Specification that the guarantee is primary, independent, and continuing, with provisions for Islamic finance compliance

7. Demands and Payments: Process for making demands under the guarantee and payment mechanisms compliant with Islamic finance principles

8. Preservation of Rights: Beneficiary's rights preservation and the continuing nature of the guarantee

9. Discharge and Release: Conditions for discharge of the guarantee and release of the guarantor

10. Expenses and Taxes: Allocation of costs, expenses, and taxes related to the guarantee

11. Notices: Communication procedures between parties

12. Governing Law and Jurisdiction: Confirmation of Saudi law governance and jurisdiction of Saudi courts/committees

13. Execution: Signature blocks and execution formalities