Down Payment Bank Guarantee Template for United Arab Emirates

The Down Payment Bank Guarantee is a crucial financial instrument in the UAE business landscape, particularly in construction and large-scale commercial projects. It is typically required when a project owner or employer makes an advance payment to a contractor or supplier to commence work or deliver goods. The guarantee provides security by ensuring that the advance payment can be recovered if the contractor fails to perform their obligations. This document must comply with UAE Federal Laws, including the Civil Code (Federal Law No. 5 of 1985) and Commercial Code (Federal Law No. 18 of 1993), as well as Central Bank regulations. The guarantee usually includes specific terms for progressive reduction as the work progresses and the advance payment is amortized, along with clear conditions for calling upon the guarantee.

1. Bank Details and Reference: Full name and details of the issuing bank, guarantee reference number, and date

2. Beneficiary Details: Complete details of the party receiving the guarantee (typically the project owner or employer)

3. Applicant Details: Complete details of the party requesting the guarantee (typically the contractor)

4. Guarantee Amount: The specific amount of the guarantee in both figures and words

5. Underlying Contract Reference: Details of the main contract or agreement for which the down payment is being made

6. Purpose of Guarantee: Clear statement that this is a down payment guarantee and its specific purpose

7. Guarantee Terms: Core terms including validity period, conditions for calling the guarantee, and payment obligations

8. Reduction Clause: Terms for progressive reduction of the guarantee amount as the down payment is amortized

9. Claim Process: Procedure and requirements for making a claim under the guarantee

10. Expiry Terms: Specific conditions regarding the expiry of the guarantee and return of the original document