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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."
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
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
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
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
Legal
Finance
Treasury
Compliance
Risk Management
Corporate Banking
Trade Finance
Commercial
Credit
Company Secretariat
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
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