Back To Back Bank Guarantee Template for Nigeria

The Back To Back Bank Guarantee is essential in transactions where a beneficiary requires a guarantee from a specific bank (often a local Nigerian bank) while the applicant has a banking relationship with a different institution. This document is particularly relevant for international trade, large infrastructure projects, and government contracts in Nigeria where local bank participation is mandatory. The agreement details the mechanism by which the second bank issues a guarantee to the beneficiary, backed by a counter-guarantee from the first bank, thereby distributing risk and ensuring compliance with Nigerian banking regulations. The document includes comprehensive provisions for the issuance, maintenance, and eventual discharge of both guarantees, along with associated fees, security requirements, and risk mitigation measures. It's structured to comply with Nigerian banking laws while incorporating international banking practices where applicable.

1. Parties: Details of the Account Party (applicant), the First Bank (issuing bank), and the Second Bank (guarantor bank)

2. Background: Context of the underlying transaction requiring the guarantee and the relationship between the parties

3. Definitions: Key terms used throughout the agreement including 'Primary Guarantee', 'Counter Guarantee', 'Beneficiary', etc.

4. Structure of the Guarantee: Details of how the back-to-back guarantee arrangement works, including the relationship between primary and counter guarantees

5. Issue of Guarantees: Process and conditions for issuing both the primary guarantee and counter guarantee

6. Payment Obligations: Terms governing payment obligations, including trigger events and payment mechanisms

7. Fees and Costs: Details of all fees, charges, and costs associated with the guarantee arrangement

8. Security and Collateral: Requirements for any security or collateral to be provided by the Account Party

9. Representations and Warranties: Standard declarations made by each party regarding their capacity and authority

10. Events of Default: Circumstances constituting default and their consequences

11. Termination: Conditions and procedures for terminating the guarantee arrangement

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