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The Retention Bank Guarantee is a crucial financial instrument in construction and infrastructure projects under Swiss law. It is typically used when a contractor wishes to avoid having a percentage of their progress payments retained by the project owner as security for performance and quality of work. Instead of cash retention, the contractor provides a bank guarantee for an equivalent amount. The guarantee must comply with Swiss banking regulations and the Swiss Code of Obligations, ensuring it meets all legal requirements for enforceability. This document becomes particularly important during the defects liability period and project completion stages, where it serves as security for any defects or outstanding works. The Retention Bank Guarantee provides benefits to both parties: the project owner maintains security while the contractor improves their cash flow position. The document includes essential details such as the guaranteed amount, validity period, triggering conditions for claims, and specific procedures for demanding payment.

1. Bank Details and Reference: Identification of the issuing bank, guarantee number, and date of issuance

2. Beneficiary Details: Full name and address of the party benefiting from the guarantee

3. Principal Details: Full name and address of the party requesting the guarantee (typically the contractor)

4. Underlying Relationship: Reference to the main contract or relationship for which the retention guarantee is issued

5. Guarantee Amount: The maximum sum guaranteed, expressed in numbers and words

6. Validity Period: Clear specification of when the guarantee becomes effective and when it expires

7. Trigger Conditions: Specific conditions under which the guarantee can be called upon

8. Payment Terms: Timeline and process for payment upon valid demand

9. Claim Procedure: Formal requirements for making a claim under the guarantee

10. Governing Law and Jurisdiction: Confirmation of Swiss law application and jurisdiction