A Drawdown Bank Guarantee is a crucial financial instrument in Saudi Arabian commercial transactions where a bank provides a guarantee of payment to a beneficiary on behalf of a principal. This document is specifically designed for use in situations requiring a secure, Sharia-compliant financial guarantee with a clearly defined drawdown mechanism. It is commonly used in large commercial transactions, construction projects, and international trade dealings where the beneficiary requires security for performance or payment obligations. The guarantee must comply with Saudi Arabian Monetary Authority (SAMA) regulations and Sharia principles, making it suitable for use within the Saudi Arabian jurisdiction. The document includes comprehensive provisions for drawdown procedures, validity periods, and compliance requirements, ensuring it meets both regulatory standards and commercial needs.
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1. Parties: Identification of the Bank (Guarantor), the Beneficiary, and the Principal (party requesting the guarantee)
2. Background: Context of the underlying transaction and purpose of the guarantee
3. Definitions: Key terms used throughout the guarantee, including 'Guaranteed Amount', 'Expiry Date', and 'Drawdown Notice'
4. Guarantee: Core guarantee provisions, maximum amount, and validity period
5. Drawdown Mechanism: Detailed procedures for making a demand under the guarantee
6. Bank's Undertaking: Specific commitments and obligations of the bank
7. Compliance Statement: Declaration of Sharia compliance and regulatory conformity
8. Payment Terms: Conditions and timing of payment upon valid demand
9. Expiry and Release: Terms regarding expiration of the guarantee and release of obligations
10. Governing Law and Jurisdiction: Specification of Saudi law application and jurisdictional matters
1. Counter-Indemnity: Required when the principal provides indemnity to the bank; typically in a separate document
2. Assignment Provisions: Include when the guarantee needs to be transferable
3. Multiple Beneficiaries: Required when there is more than one beneficiary
4. Currency Provisions: Include for guarantees involving foreign currency
5. Force Majeure: Optional clause for extraordinary circumstances affecting guarantee performance
6. Electronic Presentation: Include when electronic submission of demands is permitted
1. Form of Demand: Template for making a valid demand under the guarantee
2. Specimen Signatures: Authorized signatures for the beneficiary and/or principal
3. Supporting Documents: List and samples of required supporting documentation for demands
4. Fee Schedule: Details of bank charges and fees (if applicable)
5. Contact Details: Communication details for all parties for notices and demands
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