Document background
The Advance Performance Guarantee is a vital financial instrument commonly used in Pakistani business transactions where advance payments are required for project execution or contract performance. This document is particularly relevant when a party (typically a contractor or supplier) receives advance payment for a project and needs to provide security to the paying party. The guarantee, issued by a Pakistani bank under local banking regulations and the Contract Act 1872, ensures that the advance payment will be properly utilized and protected against non-performance. It includes specific terms for invocation, validity period, and claim procedures, providing the beneficiary with a secure mechanism to recover the advance payment in case of default or non-performance. The document must comply with State Bank of Pakistan guidelines and may need to consider Islamic banking principles when applicable.
