The Performance Guarantee Bond serves as a critical risk mitigation tool in commercial transactions under Swiss law. It is typically required in situations where one party needs assurance of another party's performance of contractual obligations, such as in construction projects, supply contracts, or service agreements. The document outlines the guaranteed amount, triggering events for payment, and claim procedures, all structured within Switzerland's legal framework. The guarantee must comply with strict formality requirements under Swiss law, including written form and specific content requirements. This type of bond is particularly valuable in international transactions where Swiss law's reputation for stability and predictability provides additional comfort to the parties involved. The guarantor, usually a bank or financial institution, commits to pay a specified sum to the beneficiary upon demonstration that the principal has failed to meet their obligations under the primary contract.
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1. Parties: Identification of the Guarantor (typically a bank or financial institution), the Beneficiary (party receiving the guarantee), and the Principal (party whose performance is being guaranteed)
2. Background: Context of the underlying relationship and transaction necessitating the guarantee
3. Definitions: Key terms used throughout the guarantee bond
4. Guarantee: Core guarantee provisions including the maximum guaranteed amount and nature of the guaranteed obligations
5. Conditions for Payment: Specific circumstances and requirements that trigger the guarantor's payment obligation
6. Form of Demand: Required format and content of any demand made under the guarantee
7. Payment Terms: Timeline and method for payment upon valid demand
8. Expiry: Duration of the guarantee and conditions for termination
9. Reduction and Release: Circumstances under which the guaranteed amount may be reduced or the guarantee released
10. Governing Law and Jurisdiction: Confirmation of Swiss law application and jurisdiction for disputes
1. Transfer and Assignment: Include when the guarantee may need to be transferable
2. Counter-Indemnity: Include when there's a separate counter-indemnity arrangement with the Principal
3. Multiple Beneficiaries: Include when there are multiple parties entitled to make claims under the guarantee
4. Currency Provisions: Include for international guarantees involving multiple currencies
5. Force Majeure: Include when specific force majeure events might affect the guarantee obligations
6. Anti-Money Laundering Compliance: Include when required by the guarantor's compliance policies or regulatory requirements
1. Form of Demand Notice: Template for making a valid demand under the guarantee
2. Underlying Contract Extract: Relevant excerpts from the main contract being guaranteed
3. Authorized Signatories: List of persons authorized to make demands under the guarantee
4. Payment Instructions: Banking and payment details for guarantee payments
5. Evidence of Authority: Documentation proving the authority of the guarantor's signatories
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Performance Guarantee Bond
A Swiss law-governed financial instrument where a guarantor ensures the performance obligations of a principal party, providing security to the beneficiary through a formal guarantee structure.
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