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The Payment Guarantee Letter To Supplier is a critical financial instrument in UAE commercial transactions, commonly used when suppliers require payment security before proceeding with significant commercial arrangements. This document is particularly relevant in the UAE's dynamic trading environment, where international and domestic trade activities require robust payment security mechanisms. The guarantee letter, issued by a UAE-licensed bank, provides an unconditional commitment to pay a specified sum to the supplier upon demand, typically when the buyer fails to meet their payment obligations. The document must comply with UAE Central Bank regulations and commercial laws, including UAE Federal Law No. 18 of 1993 and related banking regulations. It includes specific details such as the guarantee amount, validity period, conditions for calling on the guarantee, and the governing law provisions under UAE jurisdiction.

1. Letter Header: Bank's letterhead, reference number, date, and formal addressing to the beneficiary (supplier)

2. Guarantee Amount and Currency: Clear statement of the maximum guaranteed amount in both numbers and words, including currency

3. Purpose of Guarantee: Reference to the underlying commercial transaction or contract being guaranteed

4. Validity Period: Clear specification of when the guarantee becomes effective and its expiry date

5. Terms of Payment: Conditions under which the guarantee can be called upon and payment procedure

6. Bank's Undertaking: Unconditional commitment to pay upon first written demand

7. Governing Law and Jurisdiction: Specification of UAE law as governing law and relevant jurisdiction