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The Retention Bank Guarantee is a crucial financial instrument in Malaysian construction and project contracts, designed to replace the traditional practice of holding cash retention money. This document becomes relevant when a contractor or supplier seeks to improve their cash flow by obtaining a bank guarantee instead of having a percentage of their progress payments retained by the project owner. The guarantee, governed by Malaysian law, typically amounts to 5-10% of the contract value and remains valid throughout the defects liability period. It provides the project owner with security against defects or non-performance while allowing the contractor to maintain better working capital. The document includes specific provisions for making claims, validity periods, and payment obligations, all structured in compliance with Malaysian banking regulations and contract law.

1. Bank Details and Reference Number: Issuing bank's details, guarantee reference number, and date of issuance

2. Beneficiary Details: Full name and address of the party in whose favor the guarantee is issued

3. Principal Details: Full name and address of the party who requested the bank guarantee

4. Underlying Contract Reference: Details of the main contract including contract number, date, and nature of works

5. Guarantee Amount: The maximum amount guaranteed, expressed in both figures and words

6. Purpose of Guarantee: Specific statement that this is a retention money guarantee and its purpose

7. Validity Period: Clear specification of the guarantee's start and expiry dates

8. Demand Requirements: Process and conditions for making a claim under the guarantee

9. Payment Terms: Bank's commitment to pay and the timeline for payment upon valid demand

10. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction