Forgot your password?
Please enter your email & we will send your password to you:
My Account:
Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
APPENDIX [ ]
Sample Advance Payment Guarantee 20
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 Subcontract signed on .................. between you and .................. (hereinafter referred to as the “Subcontractor”) related to ....................... (hereinafter referred to as the “Subcontract”) and the provisions of the Subcontract, ... under which the Subcontractor 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 Subcontractor fails substantially to fulfil its obligations under the Subcontract, to pay you all or part of the Guarantee Amount within .... calendar Days from your written demand by registered mail stating that the Subcontractor has failed to fulfil its obligations under the Subcontract. Such demand shall be accompanied by a copy of your notice to the Subcontractor stating that the Subcontractor is in breach of its obligations under the Subcontract, detailing such breach, and requiring the Subcontractor 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 Subcontractor.
The value of this Advance Payment Guarantee shall be automatically reduced by the amount(s) stated in invoices issued by the Subcontractor which are to be credited against the advance payment.
No variation of the Subcontract 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 Subcontract 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.
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.
[Page89:]
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 …………]
.
[Page90:]
APPENDIX [ ] Sample Performance Guarantee 21
PERFORMANCE GUARANTEE
We refer to the Subcontract signed on .................. between you and .................. (hereinafter referred to as the “Subcontractor” related to ....................... (hereinafter referred to as the “Subcontract”) and the provisions of the Subcontract, ... under which the Subcontractor has agreed to provide a Performance Guarantee in your favour in order to guarantee the performance of its contractual obligations.
Therefore, we Bank ................ the undersigned issue this Performance Guarantee in your favour for a maximum amount of ......... (the “Guarantee Amount”) and undertake, if the Subcontractor fails substantially to fulfil its obligations under the Subcontract, to pay you all or part of the Guarantee Amount within .... calendar Days from your written demand by registered mail stating that the Subcontractor has failed to fulfil its obligations under the Subcontract. Such demand shall be accompanied by a copy of your notice to the Subcontractor stating that the Subcontractor is in breach of its obligations under the Subcontract, detailing such breach, and requiring the Subcontractor to take the necessary steps to remedy such breach, failing which, the Performance Guarantee may be called.
This Performance Guarantee comes into force on the Start Date according to the Subcontract.
Its actual amount shall be reduced by half on Taking-Over/Provisional Acceptance and at the latest on ............. and will expire upon Final Acceptance and at the latest on ......... 22
Consequently, any written demand under this guarantee must be received by us on or before the said date of expiry.
On its expiry, it will become automatically null and void, whether or not returned to us.
[Page91:]
This Performance Guarantee is not assignable or transferable.
This Performance Guarantee is subject to the current Uniform Rules for Demand Guarantees published by the International Chamber of Commerce (ICC).
This Performance 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’).
[Page92:]
APPENDIX [__] Schedule of Subcontractual Payments and Milestone Guidance Notes
General Purpose
The Parties need to agree on a Schedule of Subcontractual Payments specifying how the amount to be paid is to be calculated, the events that will entitle the Subcontractor to claim that payment, and the documentation the Subcontractor is obliged to present to obtain payment. In the absence of specific agreement, Chapter 6 applies without modification by reference to this Appendix [ ].
Security is to be posted for any down payment (and where so agreed amortized pro rata).
A. Progress payments
Applications for progress payments are to be made based on the volume of work during any Invoice Period. The application should include any measurements or calculation in support of the sum applied for together with invoices for material and Plant and similar items included in such application. In such case the Invoice Period shall be monthly or any other period agreed between the Parties.
B. Milestones
The principle of milestones is that payments become due on the occurrence of specific agreed events. The Schedule of Milestones should set out the event, the particular sum payable on the event and any documentation needed to substantiate the occurrence of the event. A specimen Schedule of Milestones is set out below, which the Parties must adapt to the circumstances of the Subcontract.
1. Frequency of Milestones
It is up to the Parties to specify the frequency of milestones; the Parties may specify a large number of milestones, each associated with a minor sum, or a single milestone in an Invoice Period. Under this Subcontract, an Invoice Period is defined as a month, and an invoice is rendered once in an Invoice Period for all milestones achieved during the preceding Invoice Period. The Parties are at liberty to define longer or shorter Invoice Periods.
2. Amount of Milestone
It is suggested that this be a specified amount, rather than an amount calculated by reference to e.g. actual cost of an item. If milestone payment amounts are floating, the Parties will need to specify a milestone toward the end of the milestone schedule that reconciles the agreed Subcontract amount and the amounts paid.
[Page93:]
3. Event
Milestone events are
- specific events such as completing Sections of work. Specific events could be construction events, e.g. first concrete, cable pull complete or enclosure complete
- Plant shipping events, e.g. item loaded on vessel cleared for export, item delivered to the Site
- Document delivery events, e.g. detail Design delivered or
- Other events.
Milestones defined as events may occur at any time during a month; but, unless otherwise agreed, invoicing occurs only once a month, for all events achieved during the previous month.
4. Documentation Required
The documentation required depends primarily on the way the event is defined.
For milestone events, the documentation required will depend on the nature of the event and on the source of financing, if any. For example, export-credit agency financing may be released on the basis of the value of exports, so that the earliest event that permits invoicing is the loading of the goods on the vessel; the corresponding documentation is the (on-board) bill of lading.
5. Advance Payment and Retention
If an advance payment is agreed as a percentage of Subcontract Price, then the amortization, if any, of the down payment must be specifically addressed in the calculation of the invoice amounts and the milestone payment amounts can be specified accordingly.
[Page94:]
[Page95:]
Payment Application Format
The Subcontractor’s application for payment shall as a minimum set out:
[Page96:]
Guidelines relating to Performance Tests
1. Principle
The Performance Test or Tests are intended to provide the Parties with an opportunity to review the condition and performance of the Subcontract Works prior to Taking- Over and allow the Main Contractor to satisfy itself that the Subcontract Works have been executed in accordance with the Subcontract. Note that there may be situations in which the Performance Test or Tests are undertaken after Taking-Over, or in which there are no Performance Tests at all.
2. Methodology for Performance Tests
If not otherwise specified by the Parties, the Subcontractor shall provide the Main Contractor with the methodology for conducting the Performance Test no later than 90 Days before the first stage of the Performance Tests is scheduled to commence. Unless otherwise agreed by the Parties, the methodology shall describe:
(ii) the industry standard or protocol in accordance with which the results are established; and
(iii) any tolerances, corrections or adjustments (e.g. for ambient conditions, season, etc.) to be applied;
3. Agreement as to methodology
If no methodology is otherwise agreed between the Parties, then the methodology proposed by the Subcontractor shall apply. In such cases the Main Contractor shall be entitled to object to the methodology proposed by the Subcontractor only on the basis that the Subcontractor’s proposed methodology:
The Main Contractor shall raise its objections within 30 Days of its receipt of the Subcontractor’s proposed methodology, proposing a reasonable alternative methodology or amendments to the Subcontractor’s proposed methodology.
If the Subcontractor and the Main Contractor cannot agree on a methodology within a further 30 Days, the Parties shall refer the dispute to the CDB.
4. Time for delivery of Performance Test report(s)
Unless otherwise specified or agreed between the Parties, the Subcontractor shall provide the Main Contractor with the report of each completed Performance Test forthwith upon the Subcontractor’s completion or receipt of such report. If the nature of the procedure was to assess whether the Subcontract Works or a part thereof attained a certain level of performance, the report shall clearly state the level of performance attained as well as whether or not the required level of performance was attained.
[Page98:]
Subcontractor’s Access after Taking-Over
Guidelines for compiling an Appendix on Subcontractor’s access after Taking-Over
Purpose of this Appendix
Taking-Over marks the point in time where control over the Site and the Subcontract Works, and the risk of loss and damage to the Subcontract Works, pass to the Main Contractor. While prior to Taking-Over, the Subcontractor may have had full control of the Site, after Taking-Over control and responsibility pass to the Main Contractor. Consequently, the Subcontractor must now look to the Main Contractor to coordinate the Subcontractor’s access to the Site.
The Subcontractor may, amongst other things, require access to:
The complexity of the issues should not be underestimated. At this point in time, the Subcontract Works may be in operation, yet the Subcontractor may reasonably require that the Subcontract Works (or a part of it) be shut down for potentially prolonged and uncertain periods in order to enable it to execute the remedial works. Therefore unless otherwise agreed the following provisions shall apply:
1. Subcontractor’s right of access after Taking-Over
Notwithstanding that Taking-Over shall have occurred and the care of the Site passed to the Main Contractor, the Subcontractor shall be entitled to be granted such access to the Site and to the Subcontract Works as the Subcontractor may reasonably require in order to fulfil its obligations, or to exercise its rights, under this Subcontract, all in accordance with the procedures set out in this Appendix 4 and notwithstanding that the Parties may be in dispute.
2. Mutual acknowledgements
The Subcontractor appreciates and acknowledges that the Subcontract Works are in operation and that any access by the Subcontractor which prevents or delays operation of the Subcontract Works is onerous to the Main Contractor. The Main Contractor appreciates and acknowledges that the Subcontractor requires access to the Subcontract Works in order to perform its obligations or exercise its rights under[Page99:]this Subcontract and to prevent the Subcontractor from doing so is onerous to the Subcontractor.
3. Subcontractor’s obligation to notify
At any time the Subcontractor determines that it requires access to the Subcontract Works, it shall notify the Main Contractor, stating:
4. Access requiring shut-down of the Project or Subcontract Works or any part of them
The Subcontractor’s right of access shall include the right to require a shut-down or reduction in the operation of the Subcontract Works. Any modifications or repairs the Subcontractor is required to perform will be accomplished by the Subcontractor with minimal interference with operation of the Subcontract Works and reductions in and shut-downs of the Subcontract Works will be required only when necessary. The Main Contractor will give access within 30 Days of any such request.
5. Access required for Defects correction
If the Subcontractor is required to perform correction of Defects pursuant to Article 49, the Main Contractor shall, unless otherwise agreed, grant such access within 15 Days.
[Page100:]
ICC AT A GLANCE
ICC is the world business organization, a representative body that speaks with authority on behalf of enterprises from all sectors in every part of the world.
The fundamental mission of ICC is to promote trade and investment across frontiers and help business corporations meet the challenges and opportunities of globalization. Its conviction that trade is a powerful force for peace and prosperity dates from the organization’s origins early in the last century. The small group of farsighted business leaders who founded ICC called themselves “the merchants of peace”.
Because its member companies and associations are themselves engaged in international business, ICC has unrivalled authority in making rules that govern the conduct of business across borders. Although these rules are voluntary, they are observed in countless thousands of transactions every day and have become part of the fabric of international trade.
ICC also provides essential services, foremost among them the ICC International Court of Arbitration, the world’s leading arbitral institution. Another service is the World Chambers Federation, ICC’s worldwide network of chambers of commerce, fostering interaction and exchange of chamber best practice.
Within a year of the creation of the United Nations, ICC was granted consultative status at the highest level with the UN and its specialized agencies.
Business leaders and experts drawn from the ICC membership establish the business stance on broad issues of trade and investment policy as well as on vital technical and sectoral subjects. These include financial services, information technologies, telecommunications, marketing ethics, the environment, transportation, competition law and intellectual property.
ICC was founded in 1919. Today it groups thousands of member companies and associations from over 130 countries. National committees work with their members to address the concerns of business in their countries and convey to their governments the business views formulated by ICC.
[Page101:]
SOME ICC SPECIALIZED DIVISIONS
ICC Publications Department is committed to offering the best resources on business and trade for the international community.
The content of ICC publications is derived from the work of ICC commissions, institutions and individual international experts. The specialized list covers a range of topics including international banking, international trade reference and terms (Incoterms), law and arbitration, counterfeiting and fraud, model commercial contracts and environmental issues.
Publications are available in both traditional paper and electronic formats from the ICC Business Bookstore.
ICC’s programme of conferences and seminars is the essential channel for passing on the world business organization’s expertise to a wider audience.
ICC Events, a Department of ICC Services, spotlights policy issues of direct concern to business such as banking techniques and practices, e-business, IT and telecoms, piracy and counterfeiting.
ICC Events also runs training courses on international arbitration and negotiating international contracts for business people, corporate counsel, lawyers and legal practitioners involved in international trade.
[Page102:]
SOURCE PRODUCTS FOR GLOBAL BUSINESS
ICC’s specialized list of publications covers a range of topics including international banking, international trade reference and terms (Incoterms), law and arbitration, counterfeiting and fraud, model commercial contracts and environmental issues.
ICC products are available from ICC national committees, which exist in over 80 countries around the world. Contact details for a national committee in your country are available at www.iccwbo.org
You may also order ICC products online from the ICC Business Bookstore at www.iccbooks.com
ICC Publications
38 Cours Albert 1er
75008 Paris
France
Tel. (33 1) 49 53 29 23
Fax (33 1) 49 53 29 02
e-mail pub@iccwbo.org
20 Parties are advised always to obtain legal advice as to the enforceability of bonds or guarantees of any type, as requirements may differ from jurisdiction to jurisdiction. In addition to the conditions set forth in the guarantee, the Main Contractor’s right to make a claim under the guarantee is – as between Main Contractor and Subcontractor – subject to the conditions set forth in Article 11 of the Conditions of Subcontract
21 Parties are advised always to obtain legal advice as to the enforceability of bonds or guarantees of any type, as requirements may differ from jurisdiction to jurisdiction. In addition to the conditions set forth in the guarantee, the Main Contractor’s right to make a claim under the guarantee is – as between Main Contractor and Subcontractor – subject to the conditions set forth in Article 11 of the Conditions of Subcontract.
22 It is preferable that this be an agreed calendar date. The basis upon which there will be any extensions of validity of the Guarantee should be agreed and set out in the Subcontract.