A Guarantee Letter is a crucial financial instrument in UAE business transactions, providing security and risk mitigation for commercial dealings. This document, governed by UAE law and banking regulations, represents a formal commitment where one party (the guarantor) agrees to fulfill specific financial or performance obligations on behalf of another party (the principal debtor) if they fail to meet their commitments. The Guarantee Letter must comply with UAE Federal Law No. 5 of 1985 (Civil Code) and Central Bank regulations, particularly regarding format, content, and execution requirements. It typically includes details of all parties involved, the guaranteed amount or obligations, validity period, and conditions for claims. This document is commonly used in construction projects, trade finance, government tenders, and various commercial transactions where financial security is required.
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1. Letter Header: Official letterhead of the guarantor, date, and reference number
2. Addressee Details: Full name and address of the beneficiary of the guarantee
3. Guarantee Reference: Clear identification of the underlying agreement or obligation being guaranteed
4. Guarantee Amount: Specific amount being guaranteed, stated in both numbers and words
5. Scope of Guarantee: Clear description of what is being guaranteed and the nature of the guarantee (conditional/unconditional, revocable/irrevocable)
6. Duration: Validity period of the guarantee, including start date and expiry date
7. Demand Mechanics: Process and conditions for making a claim under the guarantee
8. Governing Law and Jurisdiction: Explicit statement that UAE law governs and specification of jurisdiction for disputes
9. Authorized Signature: Signature block with name and title of authorized signatory
1. Counter Guarantee Reference: Required when the guarantee is issued based on a counter-guarantee from another bank or institution
2. Special Conditions: Any specific conditions or requirements for claim validity, used when the guarantee is conditional
3. Assignment Clause: Include when the guarantee needs to be transferable
4. Language Clause: Required when the guarantee is issued in multiple languages, specifying which version prevails
5. Force Majeure: Optional clause describing circumstances under which guarantee obligations may be suspended
1. Form of Demand: Template for making a valid demand under the guarantee
2. Copy of Underlying Agreement: When required, attach the agreement or obligation being guaranteed
3. Authentication Documents: Copies of authorization documents proving the guarantor's authority to issue the guarantee
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Construction and Real Estate
International Trade
Manufacturing
Energy and Utilities
Telecommunications
Government and Public Sector
Retail and Commercial
Infrastructure Development
Transport and Logistics
Relevant Teams
Legal
Finance
Treasury
Risk Management
Compliance
Commercial Operations
Procurement
Project Management
Credit Control
Corporate Secretariat
Relevant Roles
Chief Financial Officer
Treasury Manager
Finance Director
Legal Counsel
Compliance Officer
Risk Manager
Commercial Director
Project Manager
Procurement Manager
Contract Administrator
Credit Manager
Banking Relationship Manager
Corporate Finance Manager
Company Secretary
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