This is a sample that may provide useful guidance, but the exact wording is subject to the agreement of the Parties and that made with the issuing bank.

ADVANCE PAYMENT GUARANTEE

We refer to the Contract signed on .................. between you and .................. (hereinafter referred to as the “Contractor”) related to ....................... (hereinafter referred to as the “Contract”) and the provisions of the Contract, ............ under which the Contractor has agreed to provide an Advance Payment Guarantee in your favour as a condition for making an advance payment of the same amount.

Therefore, we Bank ................ the undersigned issue this Advance Payment Guarantee in your favour for a maximum amount of .............. (the “Guarantee Amount”) and undertake, if the Contractor fails substantially to fulfil its obligations under the Contract, to pay you all or part of the Guarantee Amount within .... calendar Days from your written demand by registered mail stating that the Contractor has failed to fulfil its obligations under the Contract. Such demand shall be accompanied by a copy of your notice to the Contractor, stating that the Contractor is in breach of its obligations under the Contract, detailing such breach, and requiring the Contractor to take the necessary steps to remedy such breach, failing which, the Advance Payment Guarantee may be called.

This Advance Payment Guarantee comes into force upon receipt of the down payment by the Contractor.

The value of this Advance Payment Guarantee shall be automatically reduced by the amount(s) stated in invoices issued by the Contractor that are to be credited against the advance payment.

No variation of the Contract vitiates or otherwise affects this Guarantee.

This Advance Payment Guarantee shall expire when reduced to zero but in any case not later than the earlier of the date of the last Taking-Over according to the Contract or [fixed calendar date].

Any written demand under this Advance Payment Guarantee must be received by us on or before the said date of expiry.

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Upon its expiry this Advance Payment Guarantee shall be returned to us. It will become automatically null and void whether or not returned to us.

This Advance Payment Guarantee is not assignable or transferable.

This Advance Payment Guarantee is subject to the current Uniform Rules for Demand Guarantees published by the International Chamber of Commerce (ICC).

This Advance Payment Guarantee shall be governed by the law of ………

All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules (the ‘ICC Rules’).

Good notice under this Guarantee may be made by [this should be the person responsible for the guarantee at the bank …………]

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Employer’s right to make a claim under the guarantee is – as between Employer and Contractor – subject to the conditions set forth in Article 11 of the Conditions of Contract.