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Performance Guarantee In Tender for Saudi Arabia

Performance Guarantee In Tender Template for Saudi Arabia

A Performance Guarantee in Tender is a banking instrument commonly used in Saudi Arabian public and private sector procurement processes. This document represents a bank's irrevocable commitment to pay a specified sum to the beneficiary if the principal (bidder) fails to meet their tender obligations. The guarantee must comply with Saudi Arabian law, including the Government Tenders and Procurement Law, SAMA regulations, and Islamic Shariah principles. It serves as a risk mitigation tool for project owners while enabling contractors to participate in significant tender opportunities within the Kingdom.

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What is a Performance Guarantee In Tender?

The Performance Guarantee In Tender is a crucial document in Saudi Arabia's procurement landscape, required by both government entities and private sector organizations when conducting significant tenders. This guarantee serves as financial security, typically ranging from 1% to 5% of the tender value, ensuring serious participation from bidders. It is governed by Saudi Arabian law, particularly the Government Tenders and Procurement Law and SAMA regulations, and must be Shariah-compliant. The guarantee becomes active upon submission of the tender and remains valid until the tender process concludes or a contract is awarded. It includes specific details such as the tender reference, project scope, guarantee amount, validity period, and unconditional payment obligations. This document is essential for participating in most significant procurement opportunities within the Kingdom, particularly in government and semi-government tenders.

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

1. Bank Details: Full name and address of the issuing bank

2. Guarantee Number: Unique reference number of the guarantee

3. Beneficiary Details: Full name and address of the entity receiving the guarantee

4. Principal Details: Full name and address of the contractor/bidder

5. Tender Reference: Details of the tender including tender number and project name

6. Guarantee Amount: The amount of the guarantee in numbers and words

7. Validity Period: Clear statement of the guarantee's start and end dates

8. Guarantee Terms: Core undertaking of the bank to pay upon first demand

9. Governing Law Declaration: Statement confirming Saudi law governance and Shariah compliance

10. Authentication: Bank's authorized signatures and official stamp

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

1. Assignment Clause: Include when the beneficiary may need to transfer rights under the guarantee

2. Extension Mechanism: Include when automatic extension provisions are required by the tender

3. Force Majeure Provisions: Include for high-value guarantees where force majeure impacts need to be addressed

4. Dispute Resolution: Include when specific dispute resolution mechanisms are required beyond standard court jurisdiction

5. Language Declaration: Include when the guarantee is bilingual to specify which version prevails

6. Electronic Presentation: Include when electronic demands for payment are acceptable

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

1. Tender Documentation: Copy or extract of relevant tender requirements regarding the performance guarantee

2. Authorized Signatories: List of bank officials authorized to sign the guarantee with specimen signatures

3. Demand Format: Prescribed format for making a demand under the guarantee

4. Project Schedule: Key project dates affecting the guarantee's validity period

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

Saudi Arabia

Publisher

Ƶ

Document Type

Bank Guarantee

Sector

Banking

Cost

Free to use
Relevant legal definitions




















Clauses




















Relevant Industries

Construction

Infrastructure Development

Oil & Gas

Healthcare

Education

Transportation

Defense

Technology

Telecommunications

Energy

Water & Utilities

Manufacturing

Public Works

Real Estate Development

Relevant Teams

Legal

Finance

Procurement

Treasury

Risk Management

Commercial

Business Development

Compliance

Project Management

Corporate Banking

Bid Management

Relevant Roles

Tender Manager

Bid Director

Chief Financial Officer

Legal Counsel

Contract Manager

Project Manager

Procurement Director

Risk Manager

Treasury Manager

Bank Relationship Manager

Compliance Officer

Business Development Manager

Commercial Director

Finance Manager

Corporate Banking Officer

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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