Document background
Performance Bond Guarantees are essential financial instruments in Malaysian commercial practice, particularly required for significant construction, infrastructure, and development projects. This document type is commonly used when a project owner or employer requires security for a contractor's performance of their obligations under a main contract. The Performance Bond Guarantee provides an independent, unconditional undertaking from a financial institution to pay a specified sum upon demand if the contractor defaults on their obligations. Under Malaysian law, these guarantees must comply with specific regulatory requirements, including those set out in the Financial Services Act 2013 and the Contracts Act 1950. The document typically specifies the guaranteed amount (usually a percentage of the main contract value), validity period, demand procedures, and payment terms.
