Bank guarantee is a widely used financial instrument in international trade. It provides security and assurance to parties involved in business transactions. One crucial aspect of a bank guarantee is its terms and conditions. In this article, we will discuss how to express the terms and conditions of a bank guarantee in English.
The first section of a bank guarantee involves stating the parties involved. This includes the name and address of the beneficiary (the party who will receive payment), the name and address of the applicant (the party requesting the guarantee), and the name and address of the issuing bank.
In this section, the purpose of the bank guarantee should be clearly stated. It should outline the underlying transaction or contract for which the guarantee is being issued. For example, it could be for the performance of a specific project, payment for goods or services, or fulfillment of contractual obligations.
The guarantee amount refers to the maximum liability of the issuing bank. It represents the maximum sum that the bank is obligated to pay to the beneficiary in case of default or non-performance by the applicant. The guarantee amount should be expressed in both numbers and words to avoid any ambiguity.
A bank guarantee has a specified validity period, during which it remains valid and enforceable. This period should be clearly mentioned, including the starting and ending dates. It is important to note that a bank guarantee should be valid for a duration sufficient to cover the obligations and requirements of the underlying transaction or contract.
Conditions for invoking the guarantee outline the circumstances under which the beneficiary can request payment from the issuing bank. This section should clearly state the conditions that must be met, such as non-performance or breach of contract by the applicant. It may also include requirements for providing documentary evidence to support the claim.
The claim procedure describes the necessary steps and documents required when invoking the guarantee. It should provide instructions on how the beneficiary should notify the bank of their intention to claim, as well as the timeline within which such notification must occur. The documents and evidence to be submitted with the claim should also be clearly outlined.
This section specifies the governing law that will apply to the bank guarantee and any disputes arising from it. It also determines the jurisdiction in which any legal action related to the guarantee can be initiated. This ensures clarity and certainty for all parties involved in case of any disagreements or conflicts.
