The Bank Guarantee For Purchase Of Goods is a crucial document in Saudi Arabian commercial transactions, particularly in international trade. It provides security to sellers when dealing with unknown buyers or in high-value transactions. The guarantee is issued by a Saudi bank or a foreign bank's Saudi branch, ensuring compliance with both SAMA regulations and Islamic Shariah principles. This document is typically used when a buyer needs to provide payment security to a seller, especially in international trade where parties may not have established business relationships. The guarantee amount usually represents a percentage of the purchase price and remains valid until the underlying transaction is completed. The document includes specific conditions for demand, payment mechanisms, and dispute resolution, all within Saudi Arabia's legal framework.
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1. Parties: Identifies the three key parties: (1) the Guarantor Bank, (2) the Principal (Buyer), and (3) the Beneficiary (Seller)
2. Background: States the underlying purchase transaction and the purpose of the guarantee
3. Definitions: Defines key terms used in the guarantee, including 'Guaranteed Amount', 'Expiry Date', and 'Underlying Contract'
4. Guarantee: Core section stating the bank's unconditional and irrevocable guarantee to pay the specified amount upon compliant demand
5. Amount and Currency: Specifies the maximum guaranteed amount and currency of payment
6. Validity Period: States the effective date and expiry date of the guarantee
7. Demand Requirements: Specifies the format and content requirements for making a valid demand under the guarantee
8. Payment Terms: Details the timeline and method of payment upon receipt of a valid demand
9. Governing Law and Jurisdiction: Confirms Saudi law as governing law and specifies jurisdiction for disputes
10. Notices: Provides the mechanism and addresses for all formal communications under the guarantee
11. Shariah Compliance: Confirmation that the guarantee complies with Islamic Shariah principles
1. Multiple/Partial Drawings: Include when the guarantee allows for multiple or partial drawings rather than a single demand
2. Extension Mechanism: Include when there's a possibility of extending the guarantee period
3. Assignment Restrictions: Include when there are specific restrictions on assigning rights under the guarantee
4. Counter-Indemnity: Include when there's a separate counter-indemnity from the principal to the bank
5. Language: Include when the guarantee needs to be issued in multiple languages
6. Force Majeure: Include when specific force majeure provisions are required beyond standard provisions
7. Anti-Money Laundering Compliance: Include when enhanced AML provisions are required for high-value or cross-border guarantees
1. Form of Demand: Standard format for making a demand under the guarantee
2. Details of Underlying Purchase Contract: Summary of the key terms of the purchase contract being guaranteed
3. Description of Goods: Detailed specification of the goods being purchased
4. Payment Instructions: Bank account and payment routing details for the beneficiary
5. Required Documents: List of documents required to be submitted with any demand
6. Authorized Signatories: List of persons authorized to sign demands on behalf of the beneficiary
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Retail
Import/Export
Oil and Gas
Construction
Mining
Agricultural Products
Industrial Equipment
Consumer Goods
Pharmaceuticals
Automotive
Relevant Teams
Legal
Finance
Treasury
Procurement
Trade Finance
Risk Management
Compliance
Commercial Operations
Supply Chain
International Banking
Corporate Banking
Relevant Roles
Trade Finance Manager
Credit Manager
Procurement Manager
Financial Controller
Treasury Manager
Risk Manager
Commercial Director
Legal Counsel
Compliance Officer
Chief Financial Officer
Import/Export Manager
Supply Chain Manager
Banking Relationship Manager
Documentary Credits Specialist
Corporate Banking Officer
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