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Payment Guarantee Agreement

Payment Guarantee Agreement Template for India

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Key Requirements PROMPT example:

Payment Guarantee Agreement

"I need a Payment Guarantee Agreement where ABC Bank Ltd will guarantee payments up to INR 50 million for my company's infrastructure project in Mumbai, with the guarantee valid until March 2025."

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Document background
The Payment Guarantee Agreement is a crucial financial security instrument commonly used in Indian business transactions where payment assurance is required. It is particularly relevant in scenarios involving significant financial commitments, project financing, or commercial transactions where the beneficiary seeks additional security for payment obligations. The agreement, governed by Indian law, specifically the Indian Contract Act and banking regulations, establishes the guarantor's commitment to fulfill the principal debtor's payment obligations upon specified trigger events. This document includes detailed provisions on the guarantee's scope, demand mechanisms, payment terms, and enforcement procedures, while ensuring compliance with Reserve Bank of India guidelines and relevant statutory requirements. It serves as a risk mitigation tool, providing confidence to beneficiaries in various commercial arrangements.
Suggested Sections

1. Parties: Identifies the Guarantor, Principal Debtor, and Beneficiary with their full legal names and addresses

2. Background: Describes the underlying transaction or relationship necessitating the guarantee and the purpose of the guarantee

3. Definitions: Defines key terms used throughout the agreement including Guaranteed Obligations, Payment Trigger Events, and Guarantee Period

4. Guarantee: Core section establishing the guarantee obligation, including the scope and nature of the guarantee (conditional/unconditional)

5. Payment Terms: Details of when and how payments under the guarantee must be made, including payment mechanics and currency

6. Representations and Warranties: Standard declarations by the Guarantor regarding their capacity and authority to provide the guarantee

7. Demand Procedure: Process for making demands under the guarantee, including form of demand and supporting documentation

8. Duration and Validity: Term of the guarantee, conditions for extension, and circumstances of termination

9. Enforcement: Rights and remedies available to the Beneficiary in case of default

10. Governing Law and Jurisdiction: Specifies Indian law as governing law and identifies courts having jurisdiction

Optional Sections

1. Counter Indemnity: Used when the Guarantor requires indemnification from the Principal Debtor for payments made under the guarantee

2. Multiple Guarantors: Required when there is more than one guarantor, defining joint and several liability

3. Assignment: Include if parties want to specifically permit or restrict assignment of guarantee rights

4. Step-In Rights: Optional provision allowing Guarantor to step into the shoes of Principal Debtor in certain circumstances

5. Currency Provisions: Required for cross-border guarantees involving multiple currencies

6. Tax Provisions: Include when payments under the guarantee may have tax implications requiring gross-up or withholding

7. Force Majeure: Optional clause defining circumstances that might excuse or delay performance

Suggested Schedules

1. Form of Demand Notice: Template for making valid demands under the guarantee

2. Guaranteed Obligations: Detailed description of the obligations being guaranteed

3. Payment Details: Bank account and payment routing information for guarantee payments

4. Underlying Agreement: Copy or key terms of the agreement giving rise to the guaranteed obligations

5. Corporate Authorizations: Copies of board resolutions and other corporate approvals for the guarantee

6. Conditions Precedent: List of documents and conditions required before guarantee becomes effective

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈË°æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions

































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Relevant Industries

Banking and Financial Services

Construction and Infrastructure

International Trade

Manufacturing

Real Estate

Energy and Utilities

Telecommunications

Retail

Healthcare

Technology Services

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Commercial Operations

Credit Control

Corporate Secretarial

Banking Operations

Project Finance

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Contract Manager

Risk Manager

Company Secretary

Commercial Director

Credit Manager

Compliance Officer

Banking Relationship Manager

Project Finance Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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