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The Performance Bank Guarantee is a crucial financial instrument in Pakistani business transactions, particularly in sectors involving significant contractual commitments. It is typically required when one party (the principal) needs to provide security to another party (the beneficiary) regarding their ability to perform specific contractual obligations. The document, regulated under Pakistani banking laws and the Contract Act 1872, involves a bank's unconditional undertaking to compensate the beneficiary up to a specified amount if the principal fails to meet their obligations. This type of guarantee is commonly required in government contracts, large-scale construction projects, and major commercial transactions, where it serves as a risk mitigation tool. The guarantee amount usually ranges from 5% to 10% of the contract value, though this can vary based on the specific requirements of the project or transaction.

1. Bank Details and Reference: Opening section identifying the issuing bank, branch, and guarantee reference number

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

3. Principal Details: Full name and address of the party whose performance is being guaranteed

4. Underlying Contract Reference: Details of the primary contract or agreement for which the performance guarantee is being provided

5. Guarantee Amount: The maximum amount for which the bank is liable, expressed in both figures and words

6. Scope of Guarantee: Clear description of what performance aspects are being guaranteed

7. Terms of Invocation: Conditions under which the guarantee can be called upon and the process for making a claim

8. Expiry and Claims Period: The validity period of the guarantee and the deadline for making claims

9. Governing Law and Jurisdiction: Specification of Pakistani law as governing law and relevant jurisdiction

10. Bank's Undertaking: The bank's unconditional and irrevocable promise to pay upon valid demand