The Bank Guarantee First Demand is a crucial financial security instrument widely used in South African and international commercial transactions. It serves as an unconditional undertaking by a bank to pay a specified sum upon the beneficiary's first demand, without requiring proof of default or entitlement. This type of guarantee is particularly valuable in high-value commercial transactions, construction projects, and international trade, where immediate access to financial security is essential. The document is governed by South African law, including the Banks Act 94 of 1990 and relevant financial sector regulations, and often incorporates international banking practices such as the Uniform Rules for Demand Guarantees (URDG 758). It provides beneficiaries with a robust, easily enforceable security instrument while offering banks clear parameters for their obligations.
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1. Parties: Identification of the Bank (Guarantor), the Applicant (Principal), and the Beneficiary
2. Background: Brief description of the underlying transaction or relationship giving rise to the guarantee
3. Definitions: Key terms used in the guarantee, including 'Demand', 'Guarantee Amount', 'Expiry Date'
4. Guarantee: Core guarantee obligation and amount
5. Payment Terms: Conditions and mechanism for making a demand and receiving payment
6. Form of Demand: Specific requirements for a valid demand under the guarantee
7. Expiry: Terms regarding the expiry date and conditions for guarantee termination
8. Assignment: Provisions regarding transferability of the guarantee
9. Governing Law and Jurisdiction: Specification of South African law and jurisdiction for disputes
10. Notices: Communication methods and addresses for all parties
1. Counter-Guarantee: Required when there is a counter-guarantee arrangement with another bank
2. Electronic Presentation: Include when allowing for electronic submission of demands
3. Multiple Beneficiaries: Required when there is more than one beneficiary
4. Reduction Clause: Include when the guarantee amount can be reduced over time
5. Language: Required when the guarantee may be issued in multiple languages
6. Force Majeure: Optional clause addressing extraordinary events affecting guarantee operations
7. Anti-Money Laundering Compliance: Include when specific AML requirements need to be addressed
1. Form of Demand: Template for making a valid demand under the guarantee
2. Underlying Contract Details: Summary of the principal contract or relationship
3. Authentication Procedures: Specified procedures for verifying demands and communications
4. Authorized Signatories: List of persons authorized to make demands or act for the beneficiary
5. Fee Schedule: If applicable, details of bank charges and fees
6. URDG 758 Exclusions: List of any excluded provisions from URDG 758 if referenced
Relevant legal definitions
Applicant
Bank
Beneficiary
Business Day
Complying Demand
Counter-Guarantor
Demand
Effective Date
Electronic Presentation
Expiry Date
Guarantee Amount
Guarantee Period
Governing Law
Issue Date
Maximum Liability Amount
Non-Business Day
Notices
Original Guarantee
Payment Currency
Place of Presentation
Presentation
Principal
Reduction Amount
Relevant Currency
SARB
Specified Documents
Supporting Documents
Underlying Transaction
URDG 758
Valid Demand
Working Hours
Bank
Beneficiary
Business Day
Complying Demand
Counter-Guarantor
Demand
Effective Date
Electronic Presentation
Expiry Date
Guarantee Amount
Guarantee Period
Governing Law
Issue Date
Maximum Liability Amount
Non-Business Day
Notices
Original Guarantee
Payment Currency
Place of Presentation
Presentation
Principal
Reduction Amount
Relevant Currency
SARB
Specified Documents
Supporting Documents
Underlying Transaction
URDG 758
Valid Demand
Working Hours
Clauses
Parties
Interpretation
Definitions
Guarantee Obligation
Payment Terms
Demand Requirements
Expiry
Reduction
Assignment and Transfer
Notices
Electronic Communications
Representation and Authority
Anti-Money Laundering
Sanctions Compliance
Force Majeure
Governing Law
Jurisdiction
Counter-Guarantee
Amendment
Currency
Set-Off
Severability
Waiver
Costs and Expenses
Entire Agreement
Multiple Originals
Language
Time of Essence
Authentication
Interpretation
Definitions
Guarantee Obligation
Payment Terms
Demand Requirements
Expiry
Reduction
Assignment and Transfer
Notices
Electronic Communications
Representation and Authority
Anti-Money Laundering
Sanctions Compliance
Force Majeure
Governing Law
Jurisdiction
Counter-Guarantee
Amendment
Currency
Set-Off
Severability
Waiver
Costs and Expenses
Entire Agreement
Multiple Originals
Language
Time of Essence
Authentication
Relevant Industries
Banking and Financial Services
Construction and Infrastructure
Mining and Resources
International Trade
Real Estate Development
Manufacturing
Energy and Utilities
Telecommunications
Government and Public Sector
Transportation and Logistics
Relevant Teams
Legal
Finance
Treasury
Trade Finance
Risk Management
Compliance
Commercial
Procurement
Banking Operations
Project Management
Relevant Roles
Chief Financial Officer
Treasury Manager
Finance Director
Bank Relationship Manager
Corporate Lawyer
Trade Finance Manager
Credit Risk Manager
Procurement Manager
Contract Manager
Project Finance Manager
Commercial Director
Banking Operations Manager
Compliance Officer
Financial Controller
Legal Counsel
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