Document background
Performance Bank Guarantees are essential financial security instruments in the UAE business landscape, particularly in construction, infrastructure, and large commercial projects. When a contract requires performance security, the contractor or supplier approaches their bank to issue a Performance Bank Guarantee in favor of the project owner or employer. The guarantee typically represents a percentage (usually 5-10%) of the contract value and remains valid throughout the contract period plus any warranty period. The document must comply with UAE Federal Laws, including the Commercial Code and Civil Code, and UAE Central Bank regulations. It provides the beneficiary with immediate access to financial compensation if the principal fails to perform their contractual obligations, subject to the terms and conditions specified in the guarantee.
