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The Payment Guarantee Letter to Supplier is a crucial financial instrument in Saudi Arabian commercial transactions, designed to provide security and facilitate trade between parties. It is commonly used when a supplier requires payment assurance before proceeding with a significant commercial transaction, particularly in international trade or large domestic supplies. The document, governed by Saudi Arabian law and Islamic Shariah principles, represents a bank's irrevocable commitment to pay a specified amount to the supplier if the buyer fails to fulfill their payment obligations. The guarantee must comply with SAMA regulations and typically includes detailed information about all parties involved, the underlying commercial transaction, payment terms, validity period, and claim procedures. This type of guarantee is particularly important in the Saudi Arabian market where traditional interest-based securities may not be compatible with Islamic banking principles.

1. Letter Header: Bank's letterhead, reference number, date, and place of issuance

2. Addressee Details: Full name and address of the beneficiary (supplier)

3. Guarantee Reference: Clear identification of the underlying commercial transaction or contract being guaranteed

4. Guarantee Amount: The specific amount being guaranteed, expressed in both numbers and words

5. Principal Identification: Details of the party for whom the guarantee is being issued (the buyer/applicant)

6. Guarantee Terms: Clear statement of the bank's irrevocable and unconditional commitment to pay

7. Validity Period: Explicit start and end dates of the guarantee

8. Claim Procedure: Process and conditions for making a claim under the guarantee

9. Governing Law Statement: Reference to Saudi Law and Shariah compliance

10. Authentication: Authorized signatures, bank stamp, and any required authentication marks