Advance Payment Guarantee Bond Template for United Arab Emirates

The Advance Payment Guarantee Bond is a crucial financial instrument in the UAE business landscape, particularly in construction and large-scale commercial projects. It is used when a project owner (beneficiary) needs to make an advance payment to a contractor but requires security for such payment. The guarantee, issued by a bank, ensures that the advance payment will be returned if the contractor fails to perform their obligations or properly utilize the advance payment. The document must comply with UAE Federal Laws, Central Bank regulations, and often Sharia principles. It typically contains specific provisions about the guarantee amount, validity period, reduction mechanism, and conditions for calling the guarantee. This type of bond is particularly important in the UAE market where advance payments are common practice in major projects, and the legal framework provides specific provisions for such guarantees under UAE commercial law.

1. Bank Details and Reference: Identification of the issuing bank, guarantee number, and date of issuance

2. Beneficiary Details: Full name and address of the party receiving the guarantee (typically the employer/project owner)

3. Principal Details: Full name and address of the party for whom the guarantee is being issued (typically the contractor)

4. Project Reference: Details of the underlying contract or project for which the advance payment is being made

5. Guarantee Amount: The specific amount of the advance payment being guaranteed, expressed in both numbers and words

6. Guarantee Terms: Core terms including validity period, conditions for calling the guarantee, and bank's obligation to pay

7. Reduction Mechanism: Details of how the guarantee amount reduces as per the underlying contract progress

8. Expiry Terms: Specific conditions and date of expiry of the guarantee

9. Governing Law and Jurisdiction: Specification of UAE law as governing law and relevant courts' jurisdiction