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Performance Guarantee In Tender for Canada

Performance Guarantee In Tender Template for Canada

A Performance Guarantee in Tender is a formal financial instrument used in Canadian business transactions where a bank, insurance company, or other financial institution guarantees the performance obligations of a bidder/contractor to the project owner or tender issuer. This document, governed by Canadian federal and provincial laws, provides security to the beneficiary that the contractor will fulfill their obligations as per the tender requirements. It includes specific terms regarding the guarantee amount, validity period, claim conditions, and enforcement mechanisms, while complying with both common law principles and, where applicable, Quebec's civil law system.

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What is a Performance Guarantee In Tender?

The Performance Guarantee In Tender serves as a risk mitigation tool in Canadian business transactions, particularly in competitive bidding processes. It is typically required when participating in significant tenders or contracts where the project owner needs assurance of the bidder's capability and commitment to perform. The guarantee, issued by a bank or insurance company, provides financial security to the beneficiary, protecting against potential losses if the winning bidder fails to execute the contract or meet their obligations. This document must comply with Canadian federal legislation such as the Financial Administration Act and Contract Law Act, as well as relevant provincial regulations. The guarantee amount usually ranges from 5% to 10% of the contract value, though this can vary based on project requirements and risk assessment.

What sections should be included in a Performance Guarantee In Tender?

1. Parties: Identification of the Guarantor (typically a bank or insurance company), the Principal (the tenderer/contractor), and the Beneficiary (the entity issuing the tender)

2. Background: Context of the tender, reference to the main tender/contract, and purpose of the guarantee

3. Definitions: Definitions of key terms used throughout the guarantee document

4. Guarantee Amount: Specification of the maximum guaranteed sum and currency

5. Scope of Guarantee: Details of what the guarantee covers and the conditions under which it becomes payable

6. Duration and Validity: Term of the guarantee, including start date and expiry conditions

7. Demand and Payment: Process and conditions for making a claim under the guarantee

8. Reduction and Release: Conditions under which the guarantee amount may be reduced or the guarantee released

9. Assignment: Provisions regarding the transferability of the guarantee

10. Governing Law and Jurisdiction: Specification of applicable law and courts having jurisdiction

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

What sections are optional to include in a Performance Guarantee In Tender?

1. Multiple Beneficiaries: Required when the guarantee benefits multiple parties, specifying their rights and relationships

2. Step-In Rights: Used when the beneficiary requires the right to take over the contract in case of contractor default

3. Currency Provisions: Needed for international tenders or when multiple currencies are involved

4. Counter-Indemnity: Required when the guarantor needs additional security from the principal

5. Electronic Presentation: Include when electronic submission of claims is permitted

6. Language: Required for international contracts or in jurisdictions with multiple official languages

7. Force Majeure: Optional provisions for extraordinary circumstances affecting the guarantee

What schedules should be included in a Performance Guarantee In Tender?

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

2. Tender Details: Summary of the main tender specifications and requirements

3. Payment Schedule: If applicable, schedule of any staged reductions in the guarantee amount

4. Authority Documents: Evidence of authority and specimen signatures of authorized signatories

5. Project Timeline: Key dates and milestones relevant to the guarantee

6. Related Agreements: List and summaries of associated contracts or agreements

7. Communication Protocols: Detailed procedures for notifications and communications between parties

Authors

Alex Denne

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

Jurisdiction

Canada

Publisher

Ƶ

Document Type

Bank Guarantee

Sector

Banking

Cost

Free to use
Relevant legal definitions

















































Clauses



































Relevant Industries

Construction

Infrastructure

Public Works

Energy

Mining

Transportation

Healthcare

Defense

Telecommunications

Environmental Services

Manufacturing

Engineering Services

Utilities

Municipal Services

Information Technology

Relevant Teams

Legal

Procurement

Finance

Risk Management

Commercial

Operations

Compliance

Treasury

Business Development

Project Management

Bid Management

Contract Administration

Relevant Roles

Procurement Manager

Contract Administrator

Legal Counsel

Project Manager

Bid Manager

Financial Director

Risk Manager

Commercial Manager

Chief Financial Officer

Tender Coordinator

Compliance Officer

Business Development Manager

Operations Director

Corporate Secretary

Treasury Manager

Industries








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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