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The Payment Guarantee Letter To Supplier is a crucial document in commercial transactions where suppliers require security for their payment claims. It is commonly used in German business practice and international trade involving German entities, providing a formal guarantee mechanism that complies with German legal requirements. The document is typically issued when establishing new supplier relationships, for large-value contracts, or when dealing with critical supply chains. It includes specific details about the guaranteed amount, validity period, conditions for calling the guarantee, and payment terms. The guarantee letter must comply with German Civil Code (BGB) requirements, particularly regarding written form (§126 BGB) and guarantee provisions (§§ 765-778 BGB). This instrument is especially valuable in situations where suppliers need additional security beyond the regular contractual commitment of their business partners.

1. Letter Header: Full legal name and address of the guarantor (bank or company issuing the guarantee), date, and reference number

2. Recipient Details: Full legal name and address of the beneficiary (supplier)

3. Subject Line: Clear identification as 'Payment Guarantee Letter' with reference to the underlying commercial relationship

4. Reference to Main Contract: Details of the underlying supply contract or business relationship, including contract dates and references

5. Guarantee Declaration: Express and unequivocal statement of guarantee, including the maximum guarantee amount

6. Scope of Guarantee: Clear definition of what obligations are covered by the guarantee

7. Duration and Validity: Explicit statement of when the guarantee becomes effective and when it expires

8. Payment Conditions: Terms under which the guarantee can be called upon and payment procedure

9. Governing Law Statement: Explicit reference to German law as governing law

10. Signature Block: Space for authorized signature(s) with name(s) and title(s) of signing authority