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Advance Performance Guarantee

Advance Performance Guarantee Template for Canada

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Key Requirements PROMPT example:

Advance Performance Guarantee

"I need an Advance Performance Guarantee for a construction project in Ontario, where our bank will guarantee CAD 5 million to the project owner against advance payments made to our construction company, with the guarantee expiring on March 15, 2025."

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Document background
The Advance Performance Guarantee is a fundamental security instrument in Canadian commercial practice, particularly utilized in projects requiring substantial advance payments or having significant performance obligations. This document is essential when a project owner (beneficiary) needs security against advance payments made to a contractor or supplier (principal), while also ensuring project performance. The guarantee, issued by a financial institution, provides an unconditional commitment to pay the guaranteed amount upon valid demand, typically up to the value of the advance payment or agreed performance metrics. It's commonly used in construction, infrastructure, and large procurement contracts where the beneficiary requires protection against non-performance or misuse of advance payments. The document must comply with Canadian federal banking regulations and provincial security laws, incorporating specific provisions for demand procedures, payment terms, and enforcement mechanisms.
Suggested Sections

1. Parties: Identification of the Guarantor (financial institution), Beneficiary, and Principal (the party whose performance is being guaranteed)

2. Background: Context of the underlying contract or obligation being guaranteed, reference to the main contract, and purpose of the guarantee

3. Definitions: Key terms used throughout the guarantee, including 'Guaranteed Amount', 'Expiry Date', 'Underlying Contract', and 'Demand Notice'

4. Guarantee: Core provision stating the guaranteed amount and the guarantor's unconditional undertaking to pay

5. Scope of Guarantee: Detailed description of what obligations are covered by the guarantee

6. Demand Requirements: Procedure and requirements for making a valid demand under the guarantee

7. Payment Terms: Timing and method of payment upon receipt of a valid demand

8. Duration and Expiry: Term of the guarantee, expiry conditions, and any extension provisions

9. Reduction and Release: Circumstances under which the guaranteed amount may be reduced and conditions for release of the guarantee

10. Governing Law and Jurisdiction: Specification of applicable law and courts having jurisdiction over disputes

Optional Sections

1. Assignment: Include when transfer rights need to be addressed, typically restricting assignment by the guarantor but allowing assignment by the beneficiary

2. Counter-Indemnity: Include when the principal provides indemnity to the guarantor against claims under the guarantee

3. Multiple and Joint Guarantors: Include when there is more than one guarantor providing the guarantee

4. Step-In Rights: Include when the guarantor has the right to take over the underlying contract upon default

5. Foreign Currency Provisions: Include when the guarantee amount is in a different currency from the underlying contract

6. Force Majeure: Include when specific events beyond control need to be addressed regarding the guarantee obligations

Suggested Schedules

1. Form of Demand: Template for making a valid demand under the guarantee

2. Copy of Underlying Contract: Referenced contract or key excerpts defining the guaranteed obligations

3. Payment Instructions: Detailed banking and payment information for processing guarantee payments

4. Authority Documents: Evidence of authority of the guarantor's signatories

5. Performance Milestones: If applicable, schedule of performance targets affecting guarantee amount

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈË°æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions




































Clauses




























Relevant Industries

Construction

Infrastructure

Manufacturing

Energy

Mining

Technology

Telecommunications

Defense

Transportation

Real Estate Development

Engineering Services

Government and Public Sector

Relevant Teams

Legal

Finance

Procurement

Commercial

Risk Management

Treasury

Operations

Project Management

Compliance

Business Development

Relevant Roles

Project Manager

Contract Manager

Financial Director

Chief Financial Officer

Legal Counsel

Commercial Manager

Procurement Manager

Risk Manager

Treasury Manager

Business Development Director

Operations Director

Construction Manager

Project Finance Manager

Company Secretary

Compliance Officer

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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