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Performance Bond Agreement
"I need a Performance Bond Agreement for a construction project in London, where my company (ABC Construction Ltd) is the contractor, and we need XYZ Bank to provide a bond for 10% of the contract value (£5 million) to secure our performance obligations until March 2025."
1. Parties: Identifies and defines the Principal (employer), the Contractor, and the Surety/Bond Provider
2. Background: Sets out the context of the underlying contract and need for the performance bond
3. Definitions: Defines key terms used throughout the agreement including 'Bond Amount', 'Underlying Contract', 'Default Event'
4. Bond Guarantee: Core section specifying the guarantee amount and conditions of the bond
5. Obligations of the Surety: Details the specific obligations and responsibilities of the bond provider
6. Conditions for Payment: Specifies circumstances under which the bond can be called upon
7. Duration and Expiry: Defines the term of the bond and conditions for expiry
8. Governing Law and Jurisdiction: Specifies applicable law and courts having jurisdiction
1. Step-in Rights: Rights of the surety to take over the contract - used in complex construction or project finance bonds
2. Multiple Beneficiaries: Provisions for bonds benefiting multiple parties - used when there are multiple employers or the bond is assignable
3. Currency Provisions: Handling of multiple currencies - used in international contracts or where multiple currencies are involved
1. Form of Demand: Template for making a claim under the bond
2. Underlying Contract Details: Summary or extract of the main contract being guaranteed
3. Payment Mechanics: Detailed procedures for claiming and receiving payment
4. Corporate Authorizations: Evidence of authority to enter into the bond
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