The Financial Guarantee And Performance Guarantee is a critical legal instrument used in the Philippine business environment where both financial security and performance assurance are required from a third party. This document is particularly relevant in large-scale projects, infrastructure developments, and significant commercial transactions where stakeholders need protection against both payment defaults and performance failures. It combines elements of traditional financial guarantees with performance bonds, creating a comprehensive security instrument that complies with Philippine banking regulations, the Civil Code, and relevant financial laws. The document is commonly used in situations where a guarantor (typically a bank or financial institution) provides assurance for both the financial obligations and performance commitments of a principal debtor to a beneficiary. This type of guarantee is essential in the Philippine market where project owners and investors often require robust security arrangements that cover both monetary and operational aspects of their transactions.
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1. Parties: Identifies the Guarantor, Principal Debtor/Obligor, and Beneficiary with complete legal names and addresses
2. Background: Explains the context of the underlying obligation and reason for the guarantee
3. Definitions: Defines key terms used throughout the guarantee agreement
4. Scope of Guarantee: Details the extent of both financial and performance guarantees, including maximum liability amounts
5. Nature of Guarantee: Specifies that this is a continuing, irrevocable, and unconditional guarantee
6. Guarantor's Obligations: Detailed description of the guarantor's commitments, including payment and performance obligations
7. Conditions for Calling the Guarantee: Circumstances and procedures under which the guarantee can be called upon
8. Payment Terms: Timeframes and methods for making payments under the guarantee
9. Duration and Validity: Period of effectiveness and conditions for expiry of the guarantee
10. Representations and Warranties: Standard declarations by the guarantor regarding capacity and authority
11. Events of Default: Circumstances constituting default and consequences thereof
12. Enforcement: Mechanisms and procedures for enforcing the guarantee
13. Governing Law and Jurisdiction: Confirms Philippine law as governing law and specifies jurisdiction for disputes
14. Notices: Communication procedures and contact details for all parties
15. General Provisions: Standard boilerplate clauses including severability, amendments, and entire agreement
1. Multiple Guarantors: Required when there is more than one guarantor, defining joint and several liability
2. Security Arrangements: Include when specific assets are pledged as additional security for the guarantee
3. Step-In Rights: Required when guarantor has right to take over performance of underlying obligations
4. Counter-Indemnity: Include when principal debtor must indemnify guarantor for payments made under guarantee
5. Assignment and Transfer: Include when rights under the guarantee may need to be assigned or transferred
6. Currency Provisions: Required for international guarantees involving multiple currencies
7. Tax Provisions: Include when tax implications need specific addressing, especially in cross-border situations
1. Schedule 1 - Underlying Agreement: Copy or summary of the principal agreement being guaranteed
2. Schedule 2 - Form of Demand: Template for making a valid demand under the guarantee
3. Schedule 3 - Guaranteed Obligations: Detailed list of specific obligations covered by the guarantee
4. Schedule 4 - Corporate Authorizations: Copies of relevant board resolutions and authorizations
5. Schedule 5 - Security Documents: If applicable, details of any security arrangements or collateral
6. Appendix A - Performance Standards: Specific performance metrics or standards that must be met
7. Appendix B - Payment Procedures: Detailed procedures for processing guarantee payments
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