The Payment Guarantee Agreement is a crucial financial instrument in South African commercial transactions, providing security and assurance for payment obligations. It is commonly used in various business contexts, including construction projects, trade finance, and commercial leases, where a party requires security for substantial payment obligations. The agreement must comply with South African banking and financial services regulations, including the Banks Act 94 of 1990 and the Financial Intelligence Centre Act. The document typically specifies the guaranteed amount, conditions for payment, demand procedures, and expiry terms. This type of guarantee is particularly valuable in high-value transactions where creditworthiness needs to be assured, and it provides beneficiaries with a direct claim against a financially strong guarantor, usually a bank or financial institution.
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1. Parties: Identification of the Guarantor, Principal Debtor, and Beneficiary with full legal names and registration details
2. Background: Context of the underlying transaction and purpose of the guarantee
3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement
4. Guarantee: Core terms of the guarantee including the guaranteed amount and nature of the guarantee (conditional/unconditional)
5. Payment Terms: Conditions for payment, timing, and process for making demands under the guarantee
6. Duration and Expiry: Term of the guarantee and conditions for expiry or termination
7. Representations and Warranties: Statements of fact and assurances by the Guarantor regarding capacity and authority
8. Demands and Notices: Process and requirements for making valid demands under the guarantee
9. Governing Law and Jurisdiction: Confirmation of South African law and jurisdiction for disputes
10. General Provisions: Standard clauses including severability, whole agreement, and amendments
1. Counter-Indemnity: Terms under which the Principal Debtor indemnifies the Guarantor - used when explicitly required by the Guarantor
2. Security Provisions: Details of any security provided to support the guarantee - included when specific assets are pledged
3. Multiple Guarantors: Provisions governing joint and several liability - used when there is more than one guarantor
4. Currency Provisions: Exchange rate and currency risk provisions - included for cross-border guarantees
5. Step-In Rights: Rights of the Guarantor to take over the underlying contract - used in complex commercial guarantees
6. Assignment and Transfer: Rules for transferring guarantee rights - included when transferability is permitted
1. Schedule 1 - Guarantee Amount and Payment Details: Detailed breakdown of the guarantee amount, payment mechanics, and bank account details
2. Schedule 2 - Form of Demand: Template for making a valid demand under the guarantee
3. Schedule 3 - Underlying Agreement Details: Summary or copy of the principal agreement being guaranteed
4. Schedule 4 - Conditions Precedent: List of documents and conditions required before guarantee becomes effective
5. Appendix A - Corporate Authorizations: Copies of relevant corporate approvals and resolutions
6. Appendix B - Specimen Signatures: Authorized signatures for making and accepting demands under the guarantee
Relevant legal definitions
Agreement
Applicable Law
Banking Day
Beneficiary
Business Day
Conditions Precedent
Demand
Effective Date
Event of Default
Expiry Date
Guarantee Amount
Guarantee Period
Guaranteed Obligations
Guarantor
Interest Rate
Maximum Liability
Notice
Outstanding Amount
Parties
Payment Date
Payment Default
Principal Debtor
Principal Agreement
Rand
Related Parties
Security
Signature Date
Specified Currency
Termination Date
Underlying Agreement
Valid Demand
VAT
Writing
Applicable Law
Banking Day
Beneficiary
Business Day
Conditions Precedent
Demand
Effective Date
Event of Default
Expiry Date
Guarantee Amount
Guarantee Period
Guaranteed Obligations
Guarantor
Interest Rate
Maximum Liability
Notice
Outstanding Amount
Parties
Payment Date
Payment Default
Principal Debtor
Principal Agreement
Rand
Related Parties
Security
Signature Date
Specified Currency
Termination Date
Underlying Agreement
Valid Demand
VAT
Writing
Clauses
Guarantee
Payment Terms
Demand Procedure
Representations and Warranties
Duration and Expiry
Enforcement
Default
Indemnification
Notices
Assignment
Confidentiality
Force Majeure
Dispute Resolution
Governing Law
Jurisdiction
Severability
Entire Agreement
Amendment
Costs and Expenses
Tax
Anti-Money Laundering
Compliance with Laws
Waiver
Set-Off
Currency
Counter-Indemnity
Security
Step-In Rights
Transfer Rights
Good Faith
Further Assurance
Termination
Survival
Third Party Rights
Payment Terms
Demand Procedure
Representations and Warranties
Duration and Expiry
Enforcement
Default
Indemnification
Notices
Assignment
Confidentiality
Force Majeure
Dispute Resolution
Governing Law
Jurisdiction
Severability
Entire Agreement
Amendment
Costs and Expenses
Tax
Anti-Money Laundering
Compliance with Laws
Waiver
Set-Off
Currency
Counter-Indemnity
Security
Step-In Rights
Transfer Rights
Good Faith
Further Assurance
Termination
Survival
Third Party Rights
Relevant Industries
Banking and Financial Services
Construction and Infrastructure
International Trade
Real Estate
Manufacturing
Mining and Resources
Retail
Technology and Telecommunications
Energy and Utilities
Professional Services
Relevant Teams
Legal
Finance
Treasury
Risk Management
Compliance
Commercial Operations
Credit Control
Corporate Finance
Project Finance
Banking Relations
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Legal Counsel
Commercial Director
Risk Manager
Credit Manager
Contract Manager
Project Finance Manager
Banking Relationship Manager
Compliance Officer
Corporate Finance Manager
Financial Controller
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