The Performance Guarantee Agreement is a crucial instrument in commercial transactions under Belgian law, commonly used to provide security for significant contractual obligations. It serves as a risk mitigation tool where one party (the guarantor) provides assurance to another (the beneficiary) regarding the performance obligations of a third party (the principal debtor). This document type is particularly important in projects or transactions where performance reliability is critical, such as construction projects, supply contracts, or service agreements. The agreement must comply with Belgian civil law requirements and relevant EU regulations, particularly regarding the form of guarantees and enforcement mechanisms. It typically includes detailed provisions on the guarantee's scope, claiming conditions, and payment terms, while maintaining its character as an independent obligation from the underlying contract. The document's structure and content reflect Belgian legal principles regarding guarantee obligations and financial security instruments.
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1. Parties: Identification of the Guarantor, the Beneficiary, and the Principal Debtor
2. Background: Context of the guarantee, reference to the underlying obligation or contract being guaranteed
3. Definitions and Interpretation: Key terms used in the agreement and rules for interpretation
4. Guarantee and Indemnity: Core provisions establishing the guarantee obligation and its scope
5. Maximum Guarantee Amount: Specification of the maximum amount covered by the guarantee
6. Duration of Guarantee: Term of the guarantee, including effective date and expiry conditions
7. Demands under the Guarantee: Process and requirements for making claims under the guarantee
8. Payment Terms: Timeline and mechanics for payments upon valid demands
9. Guarantor's Representations and Warranties: Confirmations and assurances from the guarantor regarding capacity and authority
10. Independent Obligation: Confirmation that the guarantee is independent from the underlying obligation
11. No Discharge: Circumstances that do not affect the validity of the guarantee
12. Currency and Payments: Specifications regarding payment currency and payment methods
13. Costs and Expenses: Allocation of costs related to the guarantee
14. Notices: Communication requirements and contact details
15. Governing Law and Jurisdiction: Confirmation of Belgian law application and jurisdiction for disputes
1. Multiple Guarantors: Required when there is more than one guarantor, addressing joint and several liability
2. Counter-Indemnity: Include when the guarantor requires indemnification from the principal debtor
3. Step-In Rights: Include when the guarantor has the right to take over the underlying obligation
4. Assignment and Transfer: Include when transfer rights need to be specifically addressed
5. Bank Details: Include when specific payment routing instructions are required
6. Guarantee Reduction Provisions: Include when the guarantee amount reduces over time or upon specific events
7. Language Provisions: Include when multiple language versions are used, specifying the prevailing version
1. Form of Demand: Template for making valid demands under the guarantee
2. Underlying Contract: Copy or extract of the contract or obligation being guaranteed
3. Payment Schedule: If applicable, schedule of guarantee amount reductions
4. Authorized Signatories: List of persons authorized to make demands under the guarantee
5. Contact Details: Detailed contact information for all parties
6. Required Documents: List of documents required to accompany any demand under the guarantee
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