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On Demand Bank Guarantee

On Demand Bank Guarantee Template for Saudi Arabia

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Key Requirements PROMPT example:

On Demand Bank Guarantee

"I need an On Demand Bank Guarantee for a construction project in Riyadh, Saudi Arabia, with a guarantee amount of 5 million SAR, effective from March 1, 2025, to December 31, 2025, with National Commercial Bank as the guarantor."

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Document background
The On Demand Bank Guarantee is a crucial financial instrument in Saudi Arabian commercial transactions, particularly used in construction contracts, government tenders, and international trade. It provides beneficiaries with immediate access to funds upon making a compliant demand, without needing to prove default or breach by the principal. The document must comply with Saudi Arabian Banking Control Law, SAMA regulations, and Islamic Shariah principles, while often incorporating international banking standards like URDG 758. This type of guarantee is preferred in Saudi Arabia due to its simplicity in enforcement and strong protection for beneficiaries. The guarantee amount is typically a percentage of the underlying contract value, and the document includes specific provisions for demand procedures, expiry conditions, and governing law clauses that reflect Saudi jurisdiction requirements.
Suggested Sections

1. Parties: Identification of the Bank (Guarantor), the Applicant (Principal), and the Beneficiary

2. Definitions and Interpretation: Key terms used in the guarantee including Guarantee Amount, Expiry Date, and Governing Law

3. Guarantee Amount and Currency: Specific amount of the guarantee and currency denomination

4. Purpose of Guarantee: Clear statement of the underlying transaction or obligation being guaranteed

5. Demand Requirements: Specific conditions and format for making a demand under the guarantee

6. Payment Terms: Timeline and process for payment upon receipt of compliant demand

7. Expiry and Release: Terms regarding expiry date, return of guarantee, and release of obligations

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

9. Governing Law and Jurisdiction: Confirmation of Saudi law application and jurisdiction of Saudi courts

10. Notices: Communication procedures between parties including acceptable methods and addresses

Optional Sections

1. Counter-Guarantee Provisions: Required when there is a counter-guarantee from another bank, typically in international transactions

2. Electronic Presentation: Include when parties agree to accept electronic demands and communications

3. Force Majeure: Additional provisions for force majeure events affecting the guarantee

4. Language: Required when the guarantee is issued in multiple languages, specifying the prevailing version

5. Shariah Compliance Declaration: Explicit statement of Shariah compliance, required for certain Islamic banking institutions

6. SAMA Specific Requirements: Additional provisions required by SAMA for specific types of guarantees

Suggested Schedules

1. Form of Demand: Template for making a compliant demand under the guarantee

2. Form of Counter-Guarantee: Standard format for counter-guarantee if applicable

3. Required Documents: List of supporting documents required with any demand

4. Authentication Procedures: Detailed procedures for verifying authenticity of demands

5. Contact Details: Complete contact information for all parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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alex.den.21@genieai.co
Relevant Industries

Banking and Financial Services

Construction and Infrastructure

Government and Public Sector

International Trade

Real Estate Development

Oil and Gas

Manufacturing

Telecommunications

Defense Contracting

Healthcare

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Commercial Operations

Corporate Banking

Trade Finance

Islamic Banking

Project Management

Relevant Roles

Chief Financial Officer

Treasury Manager

Legal Counsel

Compliance Officer

Risk Manager

Contract Manager

Project Director

Commercial Director

Banking Relationship Manager

Corporate Finance Manager

Trade Finance Manager

Credit Risk Officer

Islamic Banking Specialist

Business Development Manager

Industries
Banking Control Law (Royal Decree No. M/5): Primary legislation governing banking operations in Saudi Arabia, including the issuance of bank guarantees and related banking activities
Commercial Courts Law (Royal Decree No. M/93): Governs commercial disputes and enforcement procedures related to bank guarantees and commercial transactions
Islamic Shariah Law: Fundamental legal framework in Saudi Arabia that ensures all financial transactions, including bank guarantees, comply with Islamic principles
SAMA Rules and Regulations: Regulatory framework issued by Saudi Central Bank governing banking practices, including specific requirements for bank guarantees
ICC Uniform Rules for Demand Guarantees (URDG 758): International rules commonly recognized in Saudi Arabia for international demand guarantees, providing standardized practices
Anti-Money Laundering Law (Royal Decree No. M/20): Ensures bank guarantees are not used for money laundering purposes and establishes due diligence requirements
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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