The Standby Guarantee is a crucial financial instrument in international commerce and domestic transactions under Danish law. It is typically used when parties need a secure, bank-backed payment commitment that can be called upon in case of default or non-performance of specified obligations. This document type combines elements of Danish contract law with international banking practices, particularly relevant for cross-border transactions where Danish entities are involved. The guarantee provides an independent payment undertaking from a bank, separate from the underlying commercial contract, and can be used for various purposes including bid security, performance security, advance payment security, or warranty obligations. The document must comply with Danish financial regulations and relevant EU directives while following international standby letter of credit practices (ISP98).
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Key Requirements PROMPT example:
Standby Guarantee
I need a Standby Guarantee for EUR 2 million to be issued by Danske Bank in favor of a German supplier as security for advance payments, with expiry on March 15, 2025, and electronic presentation of demands permitted.
1. Parties: Identification of the Guarantor (typically a bank), the Beneficiary, and the Principal (the party on whose behalf the guarantee is issued)
2. Background: Brief description of the underlying transaction or relationship necessitating the standby guarantee
3. Definitions: Key terms used throughout the guarantee document
4. Guarantee Amount and Currency: Specified amount of the guarantee and the currency in which it is denominated
5. Effective Date and Expiry: The date when the guarantee becomes effective and its expiration date or conditions
6. Demand Requirements: Specific requirements and conditions for making a valid demand under the guarantee
7. Form of Demand: The prescribed format and content requirements for a demand under the guarantee
8. Payment Terms: Timeline and process for payment upon receipt of a complying demand
9. Reduction and Release: Conditions under which the guarantee amount may be reduced or the guarantee released
10. Transfer and Assignment: Whether and under what conditions the guarantee may be transferred or assigned
11. Governing Law and Jurisdiction: Specification of Danish law as governing law and jurisdiction for disputes
12. Notices: Communication requirements and contact details for all parties
1. Automatic Extension Clause: Used when the guarantee may need to be automatically extended under certain conditions
2. Counter-Indemnity: Include when there's a separate counter-indemnity agreement with the Principal
3. Electronic Presentation: Include when demands and documents may be presented electronically
4. Multiple Beneficiaries: Required when there is more than one beneficiary
5. Partial Drawings: Include when multiple partial demands are permitted
6. Language Provisions: Required when the guarantee may be issued in multiple languages or when specific language requirements exist
7. Force Majeure: Include when specific force majeure provisions are required beyond standard banking practice
8. Bank Charges: Include when there are specific arrangements regarding bank charges and fees
1. Form of Demand: Template for making a compliant demand under the guarantee
2. Required Documents: List and format of supporting documents required with any demand
3. Authorized Signatories: List of persons authorized to sign demands and their specimen signatures
4. Fee Schedule: If applicable, schedule of fees and charges related to the guarantee
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Construction and Infrastructure
Manufacturing
Energy and Utilities
Shipping and Maritime
Import/Export
Real Estate Development
Telecommunications
Defense Contracting
Relevant Teams
Legal
Finance
Treasury
Trade Finance
Risk Management
Commercial
Compliance
Credit
International Business
Banking Operations
Relevant Roles
Treasury Manager
Chief Financial Officer
Finance Director
Legal Counsel
Contract Manager
Trade Finance Manager
Risk Manager
Commercial Director
Banking Relationship Manager
Project Finance Manager
Compliance Officer
Credit Manager
International Business Development Manager
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