Bank Guarantee Performance Bond Template for Hong Kong

The Bank Guarantee Performance Bond is a fundamental security instrument in commercial transactions under Hong Kong law, typically required for substantial contracts where performance assurance is crucial. It is commonly used in construction projects, major supply contracts, and service agreements where the beneficiary requires security against the principal's non-performance. The document establishes a direct, independent obligation from a bank to pay a specified sum upon demand if the principal defaults on their contractual obligations. Key features include the guarantee amount, validity period, claim procedures, and governing law provisions. The performance bond must comply with Hong Kong banking regulations and often incorporates international banking practices. This type of guarantee is particularly important in cross-border transactions where Hong Kong's robust legal framework provides certainty and enforceability.

1. Parties: Identification of the Guarantor (Bank), Principal (Party whose performance is guaranteed), and Beneficiary (Party receiving the guarantee)

2. Background: Context of the underlying contract or obligation being guaranteed and the purpose of the performance bond

3. Definitions: Definitions of key terms used throughout the document

4. Guarantee and Indemnity: Core guarantee provisions, including the maximum guaranteed amount and nature of the guarantee

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

6. Duration and Validity: Term of the guarantee, including effective date and expiry conditions

7. Demand and Payment: Procedures and requirements for making claims under the guarantee

8. Bank's Rights and Obligations: Specific rights, obligations, and protections of the guarantor bank

9. Principal's Covenants: Obligations and undertakings of the principal party

10. Representations and Warranties: Key statements of fact and assurances from all parties

11. Governing Law and Jurisdiction: Specification of Hong Kong law as governing law and jurisdiction for disputes

12. Notices: Communication procedures and contact details for all parties