Document background
The Retention Bank Guarantee is a crucial financial instrument in construction and infrastructure projects under Swiss law. It is typically used when a contractor wishes to avoid having a percentage of their progress payments retained by the project owner as security for performance and quality of work. Instead of cash retention, the contractor provides a bank guarantee for an equivalent amount. The guarantee must comply with Swiss banking regulations and the Swiss Code of Obligations, ensuring it meets all legal requirements for enforceability. This document becomes particularly important during the defects liability period and project completion stages, where it serves as security for any defects or outstanding works. The Retention Bank Guarantee provides benefits to both parties: the project owner maintains security while the contractor improves their cash flow position. The document includes essential details such as the guaranteed amount, validity period, triggering conditions for claims, and specific procedures for demanding payment.
