Bank Financial Guarantee Template for United Arab Emirates

The Bank Financial Guarantee is a crucial financial instrument in UAE commercial transactions, commonly used to secure contractual obligations, tender submissions, advance payments, and performance commitments. This document type is particularly relevant in the UAE market where bank guarantees are frequently required for government contracts, large commercial projects, and regulatory compliance. The guarantee must comply with UAE Federal Law No. 18 of 1993 and Central Bank regulations, providing specific details about the guaranteed amount, validity period, and conditions for payment. It serves as a risk mitigation tool, offering beneficiaries immediate access to funds upon valid demand, without the need for court proceedings. The document's structure reflects local banking practices while incorporating international standards for bank guarantees.

1. Parties: Identifies the three key parties: (1) the Bank (Guarantor), (2) the Beneficiary, and (3) the Principal (the party requesting the guarantee)

2. Background: Brief context of the underlying transaction or obligation necessitating the guarantee

3. Definitions: Key terms used in the guarantee, including 'Guaranteed Amount', 'Expiry Date', and 'Underlying Agreement'

4. Guarantee Amount and Currency: Clear statement of the maximum amount guaranteed and the currency of payment

5. Scope of Guarantee: Detailed description of the obligations being guaranteed and conditions for calling on the guarantee

6. Duration and Expiry: Validity period of the guarantee, including start date and expiry date

7. Demand Requirements: Process and requirements for making a valid demand under the guarantee

8. Payment Terms: Timeframe and method of payment upon receipt of a valid demand

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

10. Notices: Communication procedures and contact details for all parties