The Financial Performance Guarantee is a crucial financial security instrument commonly used in commercial transactions under Dutch law. It is particularly utilized when one party needs assurance of another party's financial performance or contractual obligations. This document is essential in various scenarios, including construction projects, commercial contracts, and international trade transactions, where financial security is required. The guarantee can be issued by banks, financial institutions, or corporate entities, providing a legally enforceable commitment under Dutch law to pay a specified amount upon defined trigger events. The document includes detailed provisions on the scope of the guarantee, claim procedures, payment terms, and enforcement mechanisms, all structured to comply with Dutch Civil Code requirements and relevant EU regulations. It's particularly important to note that Dutch law distinguishes between dependent and independent guarantees, which affects the nature of the guarantor's obligations and the conditions for calling on the guarantee.
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1. Parties: Identification of the Guarantor, the Beneficiary, and the Principal Debtor (if tripartite)
2. Background: Context of the guarantee, reference to the underlying obligation or agreement being guaranteed
3. Definitions: Definitions of key terms used throughout the guarantee, including 'Guaranteed Obligations', 'Guarantee Period', and 'Maximum Guaranteed Amount'
4. Guarantee: Core guarantee provisions, including scope, nature (independent or accessory), and maximum amount
5. Term and Duration: Effective date, expiry date, and any conditions affecting the duration of the guarantee
6. Demand Requirements: Formal requirements for making a valid demand under the guarantee, including notice requirements and documentation
7. Payment Terms: Timeline for payment upon demand, payment method, and currency
8. Guarantor's Rights and Obligations: Specific duties of the guarantor, including response times and examination of documents
9. Representations and Warranties: Standard representations by the guarantor regarding capacity and authority
10. Transfer and Assignment: Provisions regarding transferability of the guarantee
11. Governing Law and Jurisdiction: Confirmation of Dutch law application and jurisdiction for disputes
12. Notices: Communication requirements and contact details for all parties
13. Execution: Signature blocks and execution requirements
1. Counter-Indemnity: Optional section when the principal debtor provides indemnity to the guarantor - typically used in tripartite arrangements
2. Security: Optional section when additional security is provided to support the guarantee
3. Step-In Rights: Optional provisions allowing the guarantor to step into the underlying contract - relevant for performance guarantees
4. Multiple Guarantors: Optional section needed when there are multiple guarantors, defining joint and several liability
5. Tax Gross-Up: Optional provisions regarding tax treatment of payments under the guarantee
6. Currency Provisions: Optional detailed provisions for cross-border guarantees involving multiple currencies
7. Force Majeure: Optional provisions defining force majeure events and their impact on the guarantee obligations
1. Form of Demand: Template for making a valid demand under the guarantee
2. Underlying Agreement: Copy or key terms of the agreement being guaranteed
3. Payment Details: Banking and account information for payments under the guarantee
4. Corporate Authorizations: Copies of relevant corporate approvals and authorizations
5. Calculation of Guaranteed Amount: If complex, detailed methodology for calculating the guaranteed amount
6. Contact Details: Detailed contact information for all parties and their representatives
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