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The Advance Performance Guarantee is a crucial financial security instrument widely used in Malaysian commercial transactions where significant advance payments are made or where performance security is required. This document is essential when a project owner (Beneficiary) requires security for advance payments made to a contractor (Principal) and/or assurance of the Principal's performance obligations. The guarantee, typically issued by a Malaysian bank or financial institution, provides the Beneficiary with a direct and independent right to claim the guaranteed sum upon the Principal's default or non-performance. The document must comply with Malaysian banking regulations and contract law, including the Financial Services Act 2013 and the Contracts Act 1950. It contains specific provisions for claim procedures, validity periods, and conditions for calling on the guarantee, offering protection to all parties involved in the transaction.

1. Parties: Identifies the Guarantor (typically a bank), the Principal (the party whose performance is being guaranteed), and the Beneficiary (the party receiving the guarantee)

2. Background: Sets out the context of the underlying contract and why the guarantee is being provided

3. Definitions: Defines key terms used throughout the guarantee, including 'Guaranteed Sum', 'Expiry Date', and 'Underlying Contract'

4. Guarantee and Indemnity: The core section establishing the guarantee obligation, including the maximum guaranteed amount

5. Conditions for Payment: Specifies the circumstances and conditions under which the guarantee can be called upon

6. Claim Procedure: Details the process and requirements for making a valid claim under the guarantee

7. Duration and Expiry: Specifies the validity period of the guarantee and conditions for extension

8. Bank's Rights and Obligations: Sets out the guarantor's rights, including right to investigate claims and obligations

9. Governing Law and Jurisdiction: Specifies Malaysian law as governing law and jurisdiction for disputes