Document background
The Bank Guarantee Performance Bond is a crucial financial instrument in Saudi Arabia's commercial landscape, particularly for large-scale projects and government contracts. It provides security to project owners by ensuring that a bank will compensate them if a contractor fails to perform their obligations. This document is commonly required in construction contracts, major supply agreements, and government tenders in Saudi Arabia. The guarantee must comply with Saudi Arabian law, including the Banking Control Law and SAMA regulations, while adhering to Shariah principles. The amount typically ranges from 5% to 10% of the contract value, and the validity often extends throughout the contract period plus a warranty period. The document includes specific provisions for demand procedures, validity periods, and payment terms, all structured to meet local regulatory requirements and market practices.
