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Cash Backed Bank Guarantee Template for Nigeria

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Key Requirements PROMPT example:

Cash Backed Bank Guarantee

"I need a Cash Backed Bank Guarantee for a construction project tender, where my company (Lagos Building Corp) will provide a 500 million Naira guarantee to the Federal Ministry of Works, with the guarantee period running from March 1, 2025, to December 31, 2025."

Document background
The Cash Backed Bank Guarantee is a crucial financial instrument in Nigerian business transactions, typically used when a party needs to provide financial security for contractual obligations. It is particularly relevant in scenarios requiring substantial financial assurance, such as tender submissions, performance securities, or advance payment guarantees. The document is structured to comply with Nigerian banking laws and Central Bank of Nigeria regulations, requiring the applicant to provide a cash deposit as security for the bank's guarantee obligation. This type of guarantee is preferred by banks due to the minimal risk involved, as it is fully secured by cash collateral. The document includes specific provisions for the handling of the cash deposit, claim procedures, and validity periods, while ensuring compliance with Nigerian anti-money laundering regulations and banking practices.
Suggested Sections

1. Parties: Identification of the Bank (Guarantor), the Applicant (Customer), and the Beneficiary

2. Background: Context of the guarantee, including reference to the underlying transaction or obligation

3. Definitions: Key terms used throughout the guarantee, including banking and financial terms

4. Amount of Guarantee: Specific amount for which the guarantee is issued, currency, and any automatic reduction clauses

5. Purpose of Guarantee: Detailed description of the underlying transaction or obligation being guaranteed

6. Cash Coverage: Details of the cash deposit/backing, account information, and blocked amount

7. Duration and Validity: Commencement date, expiry date, and claim period

8. Bank's Obligations: Scope and nature of the bank's commitment, including payment terms

9. Conditions for Payment: Circumstances and documentation required for guarantee payment

10. Governing Law and Jurisdiction: Nigerian law as governing law and jurisdiction for disputes

11. Notice Provisions: Communication methods and addresses for notices between parties

Optional Sections

1. Assignment Restrictions: Include when transfer of guarantee rights needs to be restricted

2. Counter-Indemnity: Add when additional security from the applicant is required beyond cash backing

3. Force Majeure: Include for long-term guarantees where external events might affect obligations

4. Multiple Beneficiaries: Add when the guarantee benefits multiple parties

5. Partial Drawings: Include when multiple drawings against the guarantee are permitted

6. Foreign Currency Provisions: Add when the guarantee involves foreign currency considerations

7. Anti-Money Laundering Compliance: Include when dealing with high-value transactions or international parties

Suggested Schedules

1. Schedule 1 - Form of Demand: Template for making a claim under the guarantee

2. Schedule 2 - Cash Coverage Details: Specific account details and arrangements for the cash backing

3. Schedule 3 - Underlying Transaction Documents: References to main transaction documents being guaranteed

4. Schedule 4 - Fee Schedule: Bank's fees, charges, and commission details

5. Appendix A - Required Documentation: List of documents required for guarantee activation and claims

6. Appendix B - Authorized Signatories: List of persons authorized to act on behalf of each party

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions






























Clauses






























Relevant Industries

Banking and Financial Services

Construction and Real Estate

Oil and Gas

Manufacturing

International Trade

Telecommunications

Government and Public Sector

Infrastructure Development

Mining and Natural Resources

Retail and Commerce

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Banking

Trade Finance

Commercial

Credit

Company Secretariat

Relevant Roles

Chief Financial Officer

Treasury Manager

Finance Director

Bank Relationship Manager

Corporate Banking Officer

Legal Counsel

Compliance Officer

Risk Manager

Contract Manager

Commercial Director

Financial Controller

Company Secretary

Credit Risk Officer

Trade Finance Manager

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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