A Standby Bank Guarantee is a crucial financial instrument in Saudi Arabian commercial transactions, particularly used in large-scale projects, international trade, and government contracts. This document type is governed by the Saudi Banking Control Law and SAMA regulations, requiring strict adherence to both conventional banking standards and Islamic financial principles. The guarantee provides security to beneficiaries by ensuring payment up to a specified amount upon presentation of compliant documents, typically used in scenarios where performance or financial obligations need to be secured. The document must incorporate specific elements required by Saudi law, including proper identification of parties, clear payment triggers, and Sharia-compliant structures. Banks issuing such guarantees must be licensed by SAMA, and the guarantee terms must align with both local banking regulations and international banking practices where applicable.
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1. Parties: Identification of the Guarantor Bank, the Beneficiary, and the Principal (the party whose obligations are being guaranteed)
2. Background: Context of the guarantee, including reference to the underlying transaction or obligation being guaranteed
3. Definitions: Key terms used in the guarantee, including 'Guaranteed Amount', 'Expiry Date', and 'Demand Notice'
4. Guarantee: Core guarantee provision, specifying the bank's unconditional commitment to pay
5. Amount of Guarantee: Specification of the maximum guaranteed amount and currency
6. Duration and Expiry: Term of the guarantee, including effective date, expiry date, and any auto-renewal provisions
7. Demand and Payment: Procedures and requirements for making a valid demand under the guarantee
8. Form of Demand: Specific format and content requirements for a demand notice
9. Documents Required: List of supporting documents required with any demand
10. Payment Terms: Timeline and method of payment upon receipt of valid demand
11. Reduction and Release: Conditions under which the guarantee amount may be reduced or the guarantee released
12. Governing Law and Jurisdiction: Specification of Saudi law as governing law and relevant jurisdiction for disputes
1. Language: Required for bilingual guarantees, specifying which language version prevails
2. Transfer and Assignment: Include when the guarantee needs to be transferable
3. Multiple Demands: Include when multiple partial demands are permitted
4. Force Majeure: Include for longer-term guarantees to address unforeseen circumstances
5. Anti-Money Laundering Compliance: Include for high-value guarantees or when required by bank policy
6. Electronic Presentations: Include if electronic demand submissions are permitted
7. Sharia Compliance Declaration: Include when specifically required by parties or for Islamic banking institutions
1. Schedule 1 - Form of Demand: Template for submitting a valid demand under the guarantee
2. Schedule 2 - Form of Reduction Certificate: Template for documenting agreed reductions in the guarantee amount
3. Schedule 3 - Authorized Signatories: List of persons authorized to make demands under the guarantee
4. Appendix A - Underlying Contract Reference: Key details of the underlying contract or obligation being guaranteed
5. Appendix B - Special Conditions: Any special terms or conditions applicable to the guarantee
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Construction and Infrastructure
Energy and Utilities
International Trade
Real Estate Development
Government and Public Sector
Manufacturing
Telecommunications
Defense Contracting
Oil and Gas
Relevant Teams
Legal
Finance
Treasury
Trade Finance
Compliance
Risk Management
Commercial Operations
Project Management
Corporate Banking
Credit Administration
Islamic Banking
Documentary Credits
International Banking
Relevant Roles
Treasury Manager
Trade Finance Manager
Chief Financial Officer
Legal Counsel
Compliance Officer
Risk Manager
Commercial Director
Project Manager
Contract Manager
Banking Relationship Manager
Credit Risk Officer
Islamic Banking Specialist
Corporate Banking Officer
Documentary Credits Manager
Financial Controller
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