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Contract Performance Guarantee

Contract Performance Guarantee Template for Saudi Arabia

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Key Requirements PROMPT example:

Contract Performance Guarantee

"I need a Contract Performance Guarantee for a government infrastructure project in Riyadh, where our company (Al-Rashid Construction Ltd) needs to provide a 10% performance guarantee valid until March 15, 2025, to the Ministry of Transport, with the guarantee to be issued by Saudi National Bank."

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Document background
Contract Performance Guarantees are essential security instruments in Saudi Arabian commercial transactions, particularly in construction, infrastructure, and government contracts. A Contract Performance Guarantee is typically required when a contractor or service provider enters into a significant commercial contract, providing the beneficiary with financial security against non-performance or default. The guarantee amount usually ranges from 5% to 10% of the contract value, though government contracts may require higher percentages. Under Saudi law, these guarantees must comply with Sharia principles and SAMA regulations, making them unconditional, irrevocable, and payable on first demand. The document serves as an independent obligation from the underlying contract, ensuring quick access to compensation for the beneficiary without the need for court proceedings to prove default.
Suggested Sections

1. Letter Header: Bank's letterhead, reference number, and date of issuance

2. Addressee Details: Full details of the beneficiary including name, address, and commercial registration number

3. Guarantee Number: Unique reference number of the guarantee

4. Underlying Contract Reference: Details of the primary contract being guaranteed including contract number, date, and parties

5. Amount of Guarantee: The maximum guaranteed amount in both numbers and words, currency specification

6. Scope of Guarantee: Clear description of the obligations being guaranteed and the conditions under which the guarantee can be called

7. Duration and Validity: Explicit start and end dates of the guarantee, including any automatic extension conditions

8. Demand Requirements: Specific requirements and process for making a claim under the guarantee

9. Governing Law and Jurisdiction: Confirmation of Saudi law as governing law and relevant court jurisdiction

10. Authorized Signatures: Space for bank officials' signatures and bank stamp

Optional Sections

1. Assignment Clause: Include when the guarantee needs to be transferable to another beneficiary

2. Reduction Schedule: Include when the guarantee amount reduces over time according to a specific schedule

3. Multiple Beneficiaries: Include when there is more than one beneficiary of the guarantee

4. Force Majeure: Include when specific force majeure provisions are required beyond standard provisions

5. Language Provision: Include when the guarantee is issued in multiple languages to specify which version prevails

6. SAMA Compliance Statement: Include when the guarantee is issued by a Saudi bank to confirm compliance with SAMA regulations

Suggested Schedules

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

2. Copy of Underlying Contract: Relevant excerpts or full copy of the contract being guaranteed

3. Authorization Documents: Copies of relevant authorization documents from the guarantor bank

4. Reduction Schedule Table: If applicable, detailed table showing the reduction of guarantee amount over time

5. Specimen Signatures: Authorized signatures for making demands under the guarantee

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

alex.den.21@genieai.co
Relevant legal definitions






























Clauses


























Relevant Industries

Banking & Financial Services

Construction & Infrastructure

Oil & Gas

Government & Public Sector

Real Estate Development

Manufacturing

Energy & Utilities

Transportation & Logistics

Defense & Military Contracts

Healthcare Infrastructure

Telecommunications

Relevant Teams

Legal

Finance

Procurement

Commercial

Risk Management

Compliance

Treasury

Project Management

Contract Administration

Business Development

Relevant Roles

Project Manager

Contract Manager

Legal Counsel

Bank Manager

Chief Financial Officer

Commercial Director

Risk Manager

Compliance Officer

Treasury Manager

Procurement Manager

Construction Manager

General Counsel

Business Development Director

Account Manager

Project Director

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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