Deed of Guarantee by a Bank on behalf of a Company for the Performance of a Contract

Deed of Guarantee by a Bank on behalf of a Company for the Performance of a Contract

This deed of guarantee made this ……….. day of ………… 1999 between the Bank of …………….. (hereinafter called the bank) of the one part and the Governor of ……………….. (hereinafter called the purchaser) of the other part;

Whereas ……………………. a company registered under the Companies Act 1956 (hereinafter called the contractor) have by a Deed of Agreement made on the …. agreed with the purchaser to supply those plants, machinery and equipment in accordance with the terms, specifications and conditions therein contained;

And whereas in accordance with the terms and conditions of the aforesaid agreement the purchaser has to make to the contractor an advance payment of ……. Rs. ………. (Rupees…………. only) being equivalent to ………% of the total F.O.B. Value of the contract price, and such payment is to be secured by a Bank guarantee;

And whereas the bank has at the request of the contractor agreed to guarantee the refund of the said advance in case the plants, machinery and equipment of the value…… aforesaid are not delivered to the State Government in accordance with the terms and conditions of the said agreement, and the Governor has agreed to make the said advance on such security:

Now this deed witnesses as follows:

1. In consideration of the purchaser having agreed to advance a sum of………. to the contractor, through the bank, the bank doth hereby guarantee that if the contractor shall fail to supply to the purchaser the plants machinery and equipment of the value of ………….. in accordance with the specifications and conditions contained in the Deed of Agreement dated the ………. and/or any amendments or modifications in the aforesaid agreement made between the purchaser and the contractor …………….., the bank shall repay to the Governor such amount or amounts as the bank may be called upon to pay subject to the maximum aggregate of …………

Provided first that the liability of the bank under this deed shall not at any time exceed the said advance of …………….

And provided secondly that the guarantee hereunder furnished shall be released and stand discharged as soon as the contractor has supplied to the purchaser the plants machinery and equipment of the value of………… in accordance with the aforesaid Deed of Agreement.

2. This guarantee of the bank will come into force immediately upon payment of the sum of……….. being received by the bank for and on behalf of the contractor from the State Government and shall continue in force till the supply of plants, machinery and equipment of the value of……….. aforesaid is effected as testified by documents and invoices.

3. The guarantee hereinbefore contained shall not be affected by any change in the constitution of the bank or of the contractor.

4. Any account settled between the State Government and the contractor shall be the conclusive evidence against the bank of the amount due and shall not be questioned by the bank.

5. The neglect or forbearance of the Governor in enforcement of payment of any moneys the payment whereof is intended to be hereby secured or the giving of time by the State Government for the repayment thereof shall in no way relieve the bank of their liability under this deed.

6. The expressions the bank and the purchaser hereinbefore used shall include their respective successors and assigns.

In witness whereof ………………. etc. for and on behalf of the bank and secretary, department for and on behalf of the Governor have signed this deed on the day and year first above written.

For and on behalf of the bank

For and on behalf of the Governor

Witness:        1 ………….

Witness:        2 ………….

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