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Contract Performance Guarantee

Contract Performance Guarantee Template for Canada

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Key Requirements PROMPT example:

Contract Performance Guarantee

"I need a Contract Performance Guarantee for a construction project in Ontario, where Royal Bank of Canada will guarantee our contractor's performance for a CAD 5 million hospital building contract starting March 2025."

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Document background
The Contract Performance Guarantee is a crucial document in Canadian commercial transactions, particularly in sectors involving significant contractual obligations such as construction, infrastructure, and large-scale service delivery. It is typically required when a project owner or client (beneficiary) needs security against the risk of a contractor's non-performance or default. The guarantee provides financial assurance that the contracted work will be completed according to specifications, with the guarantor (usually a bank or insurance company) agreeing to pay up to a specified amount if the contractor fails to meet their obligations. The document must comply with both federal and provincial Canadian laws, including banking regulations and contract law principles. It includes specific details about the underlying contract, guarantee amount, validity period, claim procedures, and conditions for payment. This type of guarantee is often a prerequisite for winning major contracts, particularly in public sector projects or large-scale private developments.
Suggested Sections

1. Parties: Identifies the Guarantor, Principal (Contractor), and Beneficiary with full legal names and addresses

2. Background: Describes the underlying contract being guaranteed and the requirement for the guarantee

3. Definitions: Defines key terms used throughout the guarantee including Contract, Guaranteed Obligations, Guarantee Amount

4. Guarantee and Maximum Liability: States the guarantee commitment and maximum amount payable under the guarantee

5. Scope of Guarantee: Details exactly what obligations are covered by the guarantee

6. Duration and Validity: Specifies the effective date and expiry date of the guarantee

7. Conditions for Calling the Guarantee: Lists the specific circumstances and conditions under which the guarantee can be called

8. Claim Procedure: Details the process for making a claim under the guarantee, including notice requirements

9. Payment Terms: Specifies how and when payment will be made following a valid claim

10. Reduction and Release: Describes circumstances under which the guarantee amount may be reduced and when the guarantee will be released

11. Governing Law and Jurisdiction: Specifies that Canadian law governs and identifies jurisdiction for disputes

12. Notices: Specifies how and where notices must be delivered to all parties

13. Execution: Signature blocks for all parties

Optional Sections

1. Multiple Guarantors: Required when there is more than one guarantor, specifying joint and several liability

2. Assignment: Include when assignment of the guarantee rights needs to be addressed

3. Counter-Indemnity: Include when the guarantor requires counter-indemnity from the principal

4. Step-In Rights: Include when the guarantor has the right to step in and complete the contract

5. Dispute Resolution: Include when specific dispute resolution procedures beyond court jurisdiction are required

6. Currency Provisions: Include when payments might be made in multiple currencies

7. Regulatory Compliance: Include when specific regulatory requirements need to be addressed

8. Tax Provisions: Include when tax implications need to be specifically addressed

Suggested Schedules

1. Schedule A - Underlying Contract: Copy or summary of the main contract being guaranteed

2. Schedule B - Form of Demand: Template for making a claim under the guarantee

3. Schedule C - Performance Standards: Specific performance standards that trigger the guarantee

4. Schedule D - Progressive Reduction Schedule: Schedule of any planned reductions in the guarantee amount

5. Appendix 1 - Authority Documents: Corporate authorities and powers of attorney for signatories

6. Appendix 2 - Special Conditions: Any special conditions or requirements specific to the project or parties

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

Energy

Mining

Manufacturing

Technology Services

Defense Contracting

Public Works

Transportation

Telecommunications

Engineering Services

Project Development

Relevant Teams

Legal

Finance

Risk Management

Procurement

Commercial

Operations

Treasury

Compliance

Business Development

Project Management

Contract Administration

Relevant Roles

Project Manager

Contract Manager

Legal Counsel

Risk Manager

Chief Financial Officer

Commercial Director

Procurement Manager

Construction Manager

Operations Director

Treasury Manager

Compliance Officer

Business Development Manager

Account Executive

Bond Manager

Surety Underwriter

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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