Performance Guarantee Bonds are essential risk management tools in commercial transactions under Singapore law. They are commonly used when a party requires security for the performance of contractual obligations, particularly in construction, infrastructure, and large-scale projects. The Performance Guarantee Bond provides the beneficiary with direct recourse to the guarantor (usually a bank) for a specified sum if the principal fails to meet their obligations. These bonds are typically on-demand instruments, meaning payment must be made upon compliant demand without proof of default, subject to fraud or unconscionability exceptions under Singapore law.
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1. Parties: Details of the Guarantor (usually a bank), Principal (contractor), and Beneficiary
2. Background: Context of the underlying contract and purpose of the guarantee
3. Definitions: Key terms used throughout the bond document
4. Guarantee Amount: Specific sum guaranteed under the bond
5. Duration and Validity: Term of the guarantee and expiry conditions
6. Demand Requirements: Conditions and process for making claims under the bond
1. Step-in Rights: Rights of guarantor to take over project completion - used for large construction or infrastructure projects
2. Partial Claims Provisions: Provisions for making partial claims against the bond - used for complex projects with multiple milestones
3. Assignment Clauses: Rights and restrictions on assignment of the bond - used when transfer of rights might be anticipated
1. Form of Demand: Template for making claims under the bond
2. Underlying Contract Details: Summary of the main contract being guaranteed
3. Project Milestones: Key dates and deliverables (if applicable)
4. Authorized Signatories: List of persons authorized to make demands under the bond
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