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Performance Letter Of Guarantee

Performance Letter Of Guarantee Template for Switzerland

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Key Requirements PROMPT example:

Performance Letter Of Guarantee

"I need a Performance Letter of Guarantee for a Swiss construction project worth 5 million CHF, to be issued by UBS Bank in favor of Alpine Development Corp, valid until March 15, 2025, with quarterly reduction clauses linked to construction milestones."

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Document background
The Performance Letter of Guarantee is a crucial financial instrument in commercial transactions under Swiss law, particularly used in construction, infrastructure, and international trade contexts. It provides security to project owners or buyers (beneficiaries) by ensuring that they can claim compensation from a bank if a contractor or supplier (principal) fails to meet their contractual obligations. The document typically specifies a maximum guarantee amount, validity period, conditions for making claims, and required supporting documentation. This type of guarantee is particularly valued in Switzerland and international transactions due to the country's strong banking sector and reliable legal framework. The Performance Letter of Guarantee must comply with Swiss banking regulations and the Swiss Code of Obligations, often incorporating international standards such as the ICC Uniform Rules for Demand Guarantees when used in international transactions.
Suggested Sections

1. Bank Details and Reference: Identification of the issuing bank, reference numbers, and date of issuance

2. Beneficiary Details: Full name and address of the party in whose favor the guarantee is issued

3. Principal Details: Full name and address of the party whose performance is being guaranteed

4. Underlying Transaction: Reference to the main contract or obligation being guaranteed, including contract number and date

5. Guarantee Amount: The maximum sum guaranteed, currency, and any automatic reduction clauses

6. Scope of Guarantee: Specific performance obligations covered by the guarantee

7. Conditions for Demand: Requirements and documentation needed for claiming under the guarantee

8. Expiry Terms: Validity period of the guarantee and conditions for expiry

9. Payment Terms: Timeline and process for payment upon valid demand

Optional Sections

1. Governing Law and Jurisdiction: While Swiss law is applicable, explicit confirmation may be included particularly for international transactions

2. Transfer Provisions: Include when the guarantee needs to be transferable to another beneficiary

3. Reduction Clauses: Include when the guarantee amount should reduce according to specific project milestones

4. Language Declaration: Required when the guarantee is issued in multiple languages

5. URDG Declaration: Include when the guarantee is subject to ICC Uniform Rules for Demand Guarantees

6. Counter-Guarantee Reference: Include when issued under a counter-guarantee structure

Suggested Schedules

1. Demand Format: Standard format for making a demand under the guarantee

2. Project Milestone Schedule: If applicable, schedule of project milestones linked to guarantee reduction

3. Supporting Documents List: Detailed list of documents required to accompany any demand

4. Authorized Signatories: List of persons authorized to make demands under the guarantee

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 Industries

Construction

Infrastructure Development

Manufacturing

Engineering

Energy

Mining

International Trade

Real Estate Development

Telecommunications

Defense Contracting

Public Works

Industrial Projects

Relevant Teams

Legal

Finance

Treasury

Risk Management

Procurement

Commercial

Project Management

Compliance

Contract Administration

Banking Operations

Relevant Roles

Project Manager

Contract Manager

Legal Counsel

Chief Financial Officer

Treasury Manager

Risk Manager

Procurement Manager

Commercial Director

Construction Manager

Business Development Manager

Banking Relationship Manager

Compliance Officer

Corporate Finance Manager

Project Finance Director

Industries
Swiss Code of Obligations (OR): Primary source of Swiss contract law governing guarantee agreements, particularly Articles 492-512 on guarantees and sureties
Swiss Civil Code (ZGB): Provides general principles of Swiss law and rules of interpretation applicable to all contracts and obligations
Swiss Federal Banking Act: Regulates banking institutions issuing letters of guarantee and their obligations in financial transactions
ICC Uniform Rules for Demand Guarantees (URDG 758): International standard rules commonly incorporated into Swiss guarantee practice for international transactions
Swiss Federal Act on International Private Law (IPRG): Relevant for determining applicable law and jurisdiction in cases involving international parties
Swiss Federal Debt Enforcement and Bankruptcy Act: Relevant for enforcement of guarantee obligations and creditor rights in case of default
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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