Advance Payment Guarantees are essential financial instruments used in commercial transactions where significant upfront payments are required. These guarantees, when governed by Swiss law, provide a secure and internationally recognized mechanism for protecting advance payments in business transactions. The document is typically used when a buyer needs to make substantial advance payments to a supplier or contractor but requires security against non-performance or default. The guarantee is usually issued by a Swiss bank or financial institution and follows the strict requirements of Swiss banking laws and the Swiss Code of Obligations. The document specifies the guaranteed amount, validity period, conditions for demand, and payment terms. Advance Payment Guarantees are particularly crucial in international trade, construction projects, and large-scale procurement contracts, where they facilitate commerce by providing financial security while maintaining compliance with Swiss regulatory requirements.
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1. Parties: Identification of the Guarantor (typically a bank), the Beneficiary (party receiving the guarantee), and the Principal (party whose obligation is being guaranteed)
2. Background: Context of the underlying transaction, reference to the main contract requiring the advance payment guarantee
3. Definitions: Key terms used throughout the guarantee document
4. Guarantee Amount: Specification of the maximum guaranteed sum and currency
5. Scope of Guarantee: Clear definition of what the guarantee covers and the conditions under which it can be called
6. Duration and Expiry: Validity period of the guarantee, including start date and expiry conditions
7. Demand Requirements: Formal requirements for making a valid demand under the guarantee
8. Payment Terms: Timeframe and process for payment upon valid demand
9. Reduction Clause: Conditions and mechanism for reduction of the guarantee amount over time
10. Governing Law and Jurisdiction: Confirmation of Swiss law application and jurisdiction for disputes
11. Notices: Communication requirements and contact details for all parties
1. Language: Required for multi-language guarantees, specifying which language version prevails
2. Assignment: Include when transfer of guarantee rights needs to be addressed
3. Counter-Indemnity: Required when specific counter-indemnity arrangements exist between guarantor and principal
4. Force Majeure: Include for international transactions or when specific force majeure provisions are needed
5. Anti-Money Laundering Compliance: Required for high-value guarantees or when dealing with specific jurisdictions
6. Electronic Presentation: Include when electronic submission of demands is permitted
7. Partial Demands: Required when multiple partial demands are to be permitted
8. Direct Debit Authorization: Include when automatic debit arrangements are established for guarantee fees
1. Form of Demand: Template for making a valid demand under the guarantee
2. Copy of Underlying Contract: Reference copy of the main contract requiring the advance payment guarantee
3. Payment Schedule: If applicable, schedule of guaranteed advance payments and corresponding reduction of guarantee amount
4. Authorized Signatories: List of persons authorized to make demands under the guarantee
5. Bank Details: Banking information for all parties involved in the guarantee
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