Advance Performance Guarantee Template for Nigeria

The Advance Performance Guarantee is a critical document in Nigerian business transactions where substantial advance payments are made to contractors or suppliers. It serves as a risk mitigation tool for project owners and employers who need to make advance payments while ensuring protection against contractor default or non-performance. This guarantee is particularly important in sectors such as construction, manufacturing, and infrastructure development, where significant upfront funding is required. The document must comply with Nigerian banking regulations and contract law, typically involving a three-party arrangement between a financial institution (guarantor), a contractor (principal), and a project owner (beneficiary). The guarantee remains effective until specific project milestones are met or the advance payment is fully recovered, providing a secure framework for large-scale commercial transactions in Nigeria.

1. Parties: Identification of the Guarantor (bank/financial institution), the Principal (contractor/supplier), and the Beneficiary (employer/buyer)

2. Background: Context of the underlying contract and purpose of the guarantee

3. Definitions: Definition of key terms used in the guarantee including 'Guaranteed Sum', 'Expiry Date', 'Underlying Contract'

4. Guarantee Amount: Specification of the maximum guaranteed sum and currency

5. Scope of Guarantee: Details of what the guarantee covers and the conditions under which it can be called

6. Duration and Validity: Term of the guarantee, including commencement and expiry dates

7. Demand Requirements: Process and requirements for making a valid demand under the guarantee

8. Payment Terms: Timing and method of payment upon valid demand

9. Reduction and Release: Conditions for reduction of guarantee amount and release of guarantor's obligations

10. Assignment and Transfer: Restrictions on assignment or transfer of rights under the guarantee

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

12. Notices: Process and requirements for serving notices under the guarantee