The Cheque Guarantee Letter is a widely used financial instrument in the United Arab Emirates, particularly important following recent legal reforms that modified the treatment of bounced cheques. This document is typically employed when additional payment security is required in commercial transactions, real estate deals, or trade arrangements. The guarantee can be issued by banks, corporate entities, or individuals, providing assurance to the beneficiary that the specified cheque(s) will be honored upon presentation. Under UAE law, particularly the Commercial Transactions Law and Civil Code, the document creates a binding obligation on the guarantor to pay if the original cheque is dishonored. The letter must clearly specify the guaranteed amount, duration, and enforcement mechanisms, ensuring compliance with UAE Central Bank regulations and local banking practices.
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1. Letter Header: Date, addressee details, and reference number of the letter
2. Guarantor Details: Full legal name and address of the party providing the guarantee
3. Beneficiary Details: Full legal name and address of the party receiving the guarantee
4. Cheque Details: Specific details of the cheque(s) being guaranteed including cheque number(s), amount(s), drawer, drawee bank, and due date(s)
5. Guarantee Statement: Clear and unequivocal statement of guarantee, specifying the nature and extent of the guarantee
6. Terms of Enforcement: Conditions under which the guarantee can be called upon and the process for enforcement
7. Duration of Guarantee: Explicit statement of when the guarantee becomes effective and when it expires
8. Governing Law Statement: Statement confirming UAE law as the governing law
9. Signature Block: Authorized signature(s), name(s), and title(s) of the guarantor
1. Counter-Indemnity Clause: Optional clause where a third party agrees to indemnify the guarantor, used when the guarantee is issued at the request of a party other than the cheque drawer
2. Multiple Beneficiaries Clause: Used when the guarantee is issued in favor of multiple beneficiaries
3. Assignment Clause: Optional clause specifying whether the guarantee can be assigned to other parties
4. Notice Requirements: Detailed procedures for serving notices, used in more complex guarantee arrangements
5. Corporate Authority Statement: Statement confirming the authority of the guarantor to issue the guarantee, particularly important for corporate guarantors
1. Copy of Cheque(s): Attached copies of the guaranteed cheque(s)
2. Corporate Authorization: If applicable, board resolution or power of attorney authorizing the issuance of the guarantee
3. Specimen Signatures: Where required by the beneficiary, specimen signatures of authorized signatories
4. Payment Schedule: If multiple cheques are involved, a detailed schedule of cheque amounts and due dates
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Real Estate and Construction
Trading and Import/Export
Manufacturing
Retail
Commercial Services
Professional Services
Logistics and Transportation
Hospitality
General Commerce
Relevant Teams
Legal
Finance
Treasury
Risk Management
Compliance
Corporate Banking
Credit Management
Commercial Operations
Corporate Secretariat
Business Development
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Credit Manager
Legal Counsel
Commercial Director
Risk Manager
Banking Relationship Manager
Corporate Banking Officer
Compliance Officer
Finance Manager
Account Manager
Corporate Secretary
Managing Director
Financial Controller
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