A performance guarantee is issued as security for the performance of a contract or an obligation. This is to provide security for situations where there is a default in performance or non-performance of a contract such that the bank will cover for the beneficiary’s loss.
In a performance guarantee, the original contract, the beneficiary’s obligations and required documents will be clearly listed.
This document should be carefully read by the Bank and the Beneficiary.
Both the Bank and the Beneficiary should sign and return a copy, and once signed, both parties should get a copy. To avoid any future disputes, both parties may wish to have their signatures witnessed.
If either party wishes to amend the agreement in the future, both parties should agree to do so, and the original agreement and amendments should be recorded in writing and signed by both parties.
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