The Bank Guarantee First Demand is a crucial financial instrument in Saudi Arabian commercial transactions, particularly used in construction, trade, and government contracts. It provides beneficiaries with immediate access to funds upon presenting a compliant demand, without needing to prove default or breach by the principal. The guarantee must conform to SAMA regulations and Sharia principles, which prohibit interest (riba) and excessive uncertainty (gharar). This document typically includes the guarantee amount, validity period, demand requirements, and payment terms. It's particularly important in large-scale projects where the beneficiary requires strong financial security, and its first demand nature distinguishes it from conditional guarantees by eliminating the need for lengthy dispute resolution processes.
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1. Parties: Identification of the Guarantor Bank, the Beneficiary, and the Principal/Applicant
2. Reference Details: Guarantee number, date, and reference to the underlying transaction
3. Guarantee Amount: The maximum amount of the guarantee expressed in numbers and words
4. Purpose of Guarantee: Clear statement of the purpose and scope of the guarantee
5. Validity Period: Commencement and expiry dates of the guarantee
6. Demand Requirements: Specific conditions and format for making a demand under the guarantee
7. Payment Terms: Timeline and method of payment upon receipt of a valid demand
8. Governing Law and Jurisdiction: Explicit reference to Saudi Arabian law and jurisdiction
9. Notices: Communication methods and addresses for all parties
10. Language: Specification of prevailing language if bilingual
1. Counter Guarantee Provisions: Required when involving an international bank as counter-guarantor
2. Assignment Restrictions: Include when transfer of guarantee rights needs to be restricted
3. Reduction Clauses: When the guarantee amount can be reduced in stages
4. Force Majeure: Specific provisions for extraordinary events affecting guarantee obligations
5. Multiple Beneficiary Provisions: Required when there are multiple beneficiaries
6. Sharia Compliance Declaration: Explicit statement of Sharia compliance when required by parties
7. Electronic Presentation: Provisions for electronic submission of demands when agreed
1. Demand Format: Template for making a valid demand under the guarantee
2. Underlying Contract Details: Summary or extract of the main contract being guaranteed
3. Authentication Method: Specified format for authenticating demands and communications
4. Authorized Signatories: List of authorized persons who can make demands or modify the guarantee
5. Supporting Documents List: Required documents to be presented with any demand
Relevant legal definitions
Clauses
Relevant Industries
Banking & Financial Services
Construction & Infrastructure
International Trade
Oil & Gas
Manufacturing
Government & Public Sector
Real Estate Development
Energy & Utilities
Defense & Security
Telecommunications
Relevant Teams
Legal
Finance
Treasury
Trade Finance
Risk Management
Compliance
Corporate Banking
Project Management
Commercial Operations
Credit Administration
Relevant Roles
Chief Financial Officer
Treasury Manager
Trade Finance Manager
Project Manager
Contract Manager
Legal Counsel
Compliance Officer
Risk Manager
Banking Relationship Manager
Finance Director
Commercial Director
Credit Manager
Islamic Banking Specialist
Corporate Banking Officer
Documentary Credits Manager
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