A performance guarantee is a type of financial instrument that guarantees the performance of a party's obligations in a contract. In banking, a performance guarantee is commonly referred to as a bond or a bank guarantee. This article provides an example of a standard template for a bank performance guarantee.
1. The "Bank" refers to the issuing bank providing the guarantee.
2. The "Beneficiary" refers to the party to whom the guarantee is issued.
3. The "Principal Agreement" refers to the underlying contract or agreement for which the guarantee is provided.
The Bank hereby guarantees to pay the Beneficiary any amount approved under this Performance Guarantee in the event that the Principal fails to fulfill its obligations as stated in the Principal Agreement.
This Performance Guarantee shall be governed by and construed in accordance with the laws of [Jurisdiction]. Any disputes arising from this guarantee shall be subject to the exclusive jurisdiction of the courts of [Jurisdiction].
The Performance Guarantee shall remain valid until [Date], unless otherwise terminated earlier due to the fulfillment of all obligations under the Principal Agreement or upon mutual written agreement between the Bank and the Beneficiary.
1. Upon the Beneficiary's demand, the Bank will make payment within [number of days] after receipt of a written notice declaring that the Principal has failed to fulfill its obligations as outlined in the Principal Agreement.
2. The Beneficiary shall provide supporting documents that substantiate the Principal's non-performance under the Principal Agreement.
This bank performance guarantee is a legally binding instrument that ensures the completion of contractual obligations. Parties may use this template as a starting point and make necessary modifications to suit their specific requirements.
