The Corporate Performance Guarantee is a crucial instrument in Indian commercial transactions, commonly used when a company needs to provide security for the performance obligations of another entity, often a subsidiary or related company. This document type is governed by Indian law, particularly the Indian Contract Act, 1872, and the Companies Act, 2013, and requires careful consideration of various legal and regulatory requirements including stamp duty and registration. The guarantee typically covers specific performance obligations under a primary contract, with detailed provisions for enforcement, claim procedures, and remedies. It's particularly relevant in project finance, infrastructure development, and large commercial contracts where the beneficiary requires additional security beyond the principal obligor's covenant. The document must comply with RBI guidelines if there are cross-border elements and requires proper corporate authorizations under Indian company law.
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1. Parties: Identification of the Guarantor, Principal Debtor/Obligor, and Beneficiary with their full legal names and addresses
2. Background: Context of the underlying transaction or relationship being guaranteed, reference to the primary agreement, and purpose of the guarantee
3. Definitions: Definitions of key terms used throughout the guarantee, including 'Guaranteed Obligations', 'Event of Default', and other relevant terms
4. Guarantee and Indemnity: Core section defining the scope of the guarantee, the specific obligations being guaranteed, and indemnification provisions
5. Nature of Guarantee: Specification that this is a continuing guarantee and details of whether it is primary or secondary obligation
6. Guarantor's Representations and Warranties: Statements regarding the guarantor's capacity, authority, and financial ability to provide the guarantee
7. Payment Obligations: Details of when and how payments must be made, including currency, method, and timing
8. Enforcement and Claims: Process for making claims under the guarantee and enforcement mechanisms
9. Duration and Release: Term of the guarantee and conditions for its termination or release
10. Governing Law and Jurisdiction: Specification of applicable law and courts having jurisdiction
1. Multiple Guarantors: Required when there is more than one guarantor, specifying joint and several liability
2. Currency Provisions: Needed for cross-border guarantees or when multiple currencies are involved
3. Tax Gross-up: Required when tax implications need to be addressed, ensuring the beneficiary receives full value
4. Assignment and Transfer: Include when rights under the guarantee may need to be transferred
5. Regulatory Compliance: Required when specific regulatory requirements apply (e.g., RBI guidelines)
6. Counter-Indemnity: Include when the guarantor requires indemnification from the principal debtor
7. Step-In Rights: Required when guarantor needs rights to take over the underlying contract
1. Form of Demand: Template for making a claim under the guarantee
2. Underlying Agreement: Copy or key terms of the agreement being guaranteed
3. Corporate Authorizations: Board resolutions and other corporate approvals for the guarantee
4. Guarantor Financial Information: Key financial metrics or statements of the guarantor
5. Guaranteed Obligations: Detailed description of the specific obligations being guaranteed
6. Notice Details: Contact information and addresses for notices under the guarantee
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