Performance Bank Guarantees are essential financial instruments in Saudi Arabian business transactions, particularly in construction, government contracts, and large commercial projects. A Performance Bank Guarantee is typically required when one party (the Principal) needs to provide security to another party (the Beneficiary) regarding their ability to perform contractual obligations. The document must strictly comply with Saudi Arabian banking regulations, SAMA guidelines, and Shariah principles. It specifies the guaranteed amount (usually 5-10% of the contract value), validity period, conditions for calling on the guarantee, and claim procedures. These guarantees are commonly required in government tenders, major construction projects, and significant commercial contracts where performance risk needs to be mitigated.
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1. Bank Details and Reference Number: Full name and address of the issuing bank, along with the guarantee reference number
2. Beneficiary Details: Full name and address of the party in whose favor the guarantee is issued
3. Principal Details: Full name and address of the party whose performance is being guaranteed
4. Date: Issue date of the guarantee
5. Underlying Contract Reference: Details of the primary contract or obligation being guaranteed, including contract reference number and date
6. Guarantee Amount: The maximum amount of the guarantee expressed in both numbers and words
7. Guarantee Scope: Clear statement of the bank's obligation and the nature of the guarantee
8. Validity Period: Explicit start and end dates of the guarantee
9. Claim Conditions: Specific conditions under which the guarantee can be called upon
10. Governing Law and Jurisdiction: Reference to Saudi law and jurisdiction
11. Authentication: Official bank signatures, stamps, and any required authentication marks
1. Automatic Extension Clause: Used when there might be a need to extend the guarantee period automatically under certain conditions
2. Partial Claims Provision: Include when multiple partial claims against the guarantee are to be permitted
3. Assignment Restriction: Used when transfer or assignment of the guarantee needs to be explicitly prohibited
4. Force Majeure Clause: Include when specific force majeure events need to be addressed
5. Language Preference: Used when the guarantee is issued in multiple languages to specify which version prevails
6. SAMA Compliance Statement: Specific reference to SAMA regulations when required by the beneficiary or regulatory requirements
1. Original Request Letter: Copy of the request letter from the Principal requesting the issuance of the guarantee
2. Authorization Documents: Copies of authorizations of bank signatories
3. Underlying Contract Extract: Relevant extract from the underlying contract specifying the requirement for the performance guarantee
4. SAMA Format Compliance Checklist: Checklist confirming compliance with SAMA requirements for bank guarantees
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Construction and Infrastructure
Government and Public Sector
Oil and Gas
Real Estate Development
Manufacturing
Defense Contracting
Telecommunications
Energy and Utilities
Transportation and Logistics
Relevant Teams
Legal
Finance
Treasury
Procurement
Commercial
Risk Management
Compliance
Operations
Business Development
Contracts Administration
Relevant Roles
Contract Manager
Legal Counsel
Project Manager
Finance Director
Treasury Manager
Bank Relationship Manager
Procurement Manager
Commercial Director
Risk Manager
Compliance Officer
Chief Financial Officer
Business Development Manager
Tender Manager
Operations Director
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