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Bank Guarantee Performance Bond

Bank Guarantee Performance Bond Template for Nigeria

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Key Requirements PROMPT example:

Bank Guarantee Performance Bond

"I need a Bank Guarantee Performance Bond for a construction project in Lagos, Nigeria, where ABC Construction Ltd is the principal and the Lagos State Government is the beneficiary, with a guarantee value of 500 million Naira and validity until March 2025."

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Document background
The Bank Guarantee Performance Bond is a crucial security instrument in commercial transactions under Nigerian law, commonly used in construction, infrastructure, and major supply contracts. It provides financial security to the beneficiary by ensuring that a bank will pay a specified sum if the principal/contractor fails to perform their contractual obligations. This document is particularly important in the Nigerian business environment where parties seek additional security for significant commercial transactions. The bond must comply with Nigerian banking regulations, particularly the Banks and Other Financial Institutions Act (BOFIA) 2020, and is typically required for government contracts, large-scale private projects, and international trade transactions. The document includes specific provisions for calling on the guarantee, payment obligations, and dispute resolution, all tailored to the Nigerian legal framework.
Suggested Sections

1. Parties: Identifies the three key parties: the Bank (Guarantor), the Principal (Contractor/Supplier), and the Beneficiary

2. Background: Describes the underlying contract and the requirement for the performance bond

3. Definitions: Defines key terms used in the bond, including Contract, Guaranteed Sum, Expiry Date

4. Guarantee and Undertaking: Core section stating the bank's unconditional obligation to pay upon valid demand

5. Amount of Guarantee: Specifies the maximum guaranteed sum and any conditions for reduction

6. Duration and Validity: States the effective date and expiry date of the guarantee

7. Demand Requirements: Specifies the formal requirements for making a valid demand under the guarantee

8. Payment Terms: Details the timeline and method for payment upon receipt of valid demand

9. Bank's Rights and Obligations: Outlines the scope and limitations of the bank's responsibilities

10. Governing Law and Jurisdiction: Specifies Nigerian law as governing law and establishes jurisdiction

Optional Sections

1. Assignment: Include when the bond needs to be transferable to other beneficiaries

2. Multiple/Joint Beneficiaries: Include when there are multiple beneficiaries with rights under the bond

3. Partial Demands: Include when multiple partial demands are permitted under the bond

4. Counter-Indemnity: Include when specific counter-indemnity arrangements exist between bank and principal

5. Step-In Rights: Include when beneficiary has rights to assign or transfer the guarantee in specific circumstances

6. Language Priority: Include when the bond is issued in multiple languages

7. Force Majeure: Include when specific force majeure provisions affect the guarantee obligations

Suggested Schedules

1. Schedule 1 - Underlying Contract Details: Details of the contract being guaranteed, including contract reference, date, parties

2. Schedule 2 - Form of Demand: Template for making a valid demand under the guarantee

3. Schedule 3 - Bank Account Details: Payment account details for the beneficiary

4. Schedule 4 - Authentication Procedures: Procedures for verifying authenticity of demands and communications

5. Appendix A - Required Supporting Documents: List of documents required to accompany a demand

6. Appendix B - Notice Details: Contact details and address for notices for all parties

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

Banking & Financial Services

Construction & Infrastructure

Oil & Gas

Manufacturing

Energy

Telecommunications

Government & Public Sector

Mining

Real Estate Development

Transportation & Logistics

Relevant Teams

Legal

Finance

Treasury

Procurement

Commercial

Risk Management

Compliance

Project Management

Contract Administration

Corporate Secretariat

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Contract Manager

Project Manager

Treasury Manager

Risk Manager

Commercial Director

Procurement Manager

Company Secretary

Banking Relationship Manager

Compliance Officer

Project Director

Chief Legal Officer

Financial Controller

Industries
Banks and Other Financial Institutions Act (BOFIA) 2020: The primary legislation governing banking operations in Nigeria, including the issuance of financial instruments like bank guarantees
Central Bank of Nigeria Act 2007: Provides regulatory framework for banking operations and financial instruments in Nigeria
Nigerian Contract Law: Based on common law principles, governs the formation and enforcement of contracts, including bank guarantees
Stamp Duties Act: Requires proper stamping of commercial documents including bank guarantees for them to be admissible as evidence in Nigerian courts
Money Laundering (Prevention and Prohibition) Act 2022: Ensures compliance with anti-money laundering regulations in financial transactions and instruments
Evidence Act 2011: Governs the admissibility of documents, including bank guarantees, as evidence in legal proceedings
Limitations Act: Sets time limits for enforcement of contractual rights and obligations
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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