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Advance Performance Guarantee

Advance Performance Guarantee Template for Australia

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Key Requirements PROMPT example:

Advance Performance Guarantee

"I need an Advance Performance Guarantee for a construction project in Sydney, where ANZ Bank will guarantee AUD 5 million to cover advance payments made by PropertyCo Ltd to BuildWell Construction, effective from March 1, 2025, for 18 months."

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Document background
The Advance Performance Guarantee is a crucial financial instrument used in Australian business transactions where significant advance payments are involved. It provides security to project owners or clients who make advance payments to contractors or service providers before work commencement. The guarantee ensures that if the contractor fails to perform their obligations or properly utilize the advance payment, the beneficiary can recover the funds from the guarantor (typically a bank or financial institution). This document is particularly important in construction, infrastructure, and large-scale projects where substantial upfront funding is required. The guarantee must comply with Australian banking regulations, contract law, and financial services legislation, and typically includes specific conditions for calling upon the guarantee, payment mechanisms, and release conditions.
Suggested Sections

1. Parties: Identifies the Guarantor (typically a bank or financial institution), the Principal (party requesting the guarantee), and the Beneficiary (party receiving the guarantee)

2. Background: Explains the context of the underlying transaction or relationship necessitating the guarantee

3. Definitions: Defines key terms used throughout the guarantee document

4. Guarantee Amount: Specifies the maximum amount of the guarantee and the currency

5. Scope of Guarantee: Details what performance or obligations are being guaranteed

6. Duration and Validity: Specifies the effective date, expiry date, and any conditions affecting the guarantee's validity

7. Demand Requirements: Sets out the process and requirements for making a demand under the guarantee

8. Payment Terms: Specifies how and when payment will be made following a valid demand

9. Reduction and Release: Describes conditions under which the guarantee amount may be reduced or the guarantee released

10. Governing Law and Jurisdiction: Specifies that Australian law governs and establishes jurisdiction for disputes

11. Execution: Formal signing section with necessary attestations

Optional Sections

1. Counter-Indemnity: Required when the Principal provides indemnity to the Guarantor for any payments made under the guarantee

2. Assignment and Transfer: Include when the guarantee needs to be transferable or assignable

3. Multiple Beneficiaries: Required when there is more than one beneficiary under the guarantee

4. Step-In Rights: Include when the Guarantor has rights to step into the underlying contract

5. Force Majeure: Include when specific events beyond control should affect the guarantee obligations

6. Language: Required for international guarantees where multiple languages may be used

7. Notices: Include detailed notice provisions for formal communications when complex notification requirements exist

Suggested Schedules

1. Form of Demand: Template for making a valid demand under the guarantee

2. Underlying Contract Details: Summary or extract of the main contract being guaranteed

3. Authorized Signatories: List of persons authorized to make demands or give notices

4. Fee Schedule: Details of any fees, charges, and commission payable

5. Performance Milestones: If the guarantee amount reduces upon achievement of specific milestones, details of such milestones

6. Supporting Documents: List of required supporting documents for guarantee activation or demands

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Advance Payment
Authorized Representative
Banking Day
Beneficiary
Claim
Demand
Effective Date
Expiry Date
Guarantee Amount
Guarantee Period
Guarantor
Interest Rate
Maximum Liability
Notice
Obligations
Payment Date
Performance
Principal
Project
Principal Contract
Reduction Schedule
Release Date
Security
Substantial Performance
Supporting Documents
Underlying Contract
Valid Demand
Working Day
Written Notice
Business Hours
Default Event
Force Majeure Event
Guaranteed Obligations
Insolvency Event
Material Adverse Change
Permitted Assignment
Related Entity
Required Rating
Relevant Industries

Construction

Infrastructure

Mining

Energy

Real Estate Development

Manufacturing

Engineering

Government & Public Sector

Financial Services

Telecommunications

Transportation

Defense Contracting

Relevant Teams

Legal

Finance

Treasury

Risk Management

Commercial

Procurement

Project Management

Operations

Compliance

Business Development

Contract Administration

Relevant Roles

Contract Manager

Legal Counsel

Project Manager

Financial Director

Treasury Manager

Risk Manager

Commercial Manager

Procurement Manager

Chief Financial Officer

Bank Relationship Manager

Construction Manager

Operations Director

Compliance Officer

Project Director

Business Development Manager

Industries
Banking Act 1959 (Cth): Regulates banking activities in Australia, including the issuance of bank guarantees and other financial instruments
Australian Securities and Investments Commission Act 2001: Governs financial services and products, including requirements for financial guarantees and their administration
Contract Law - Australian Common Law: Establishes fundamental principles of contract formation, validity, and enforcement applicable to performance guarantees
Competition and Consumer Act 2010 (including Australian Consumer Law): Provides consumer protection provisions and regulates unfair contract terms, particularly relevant if the guarantee involves consumer transactions
Personal Property Securities Act 2009: Governs the creation and enforcement of security interests in personal property, which may be relevant for securing the guarantee
Financial Transaction Reports Act 1988: Relevant for reporting requirements and anti-money laundering provisions in financial guarantees
International Arbitration Act 1974: Important for international performance guarantees where dispute resolution mechanisms need to be specified
Financial Sector (Collection of Data) Act 2001: Relevant for reporting requirements on financial institutions issuing guarantees
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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