Construction Law/Performance Bond


In our Fidic red book contract we have a
Performance Security (Bank Guarantee) requirement as follows:

Procurement Reference No:

WHEREAS (hereinafter called “the Contractor”) has taken, pursuant to Contract No. dated  to supply (hereinafter called “the Contract).

AND WHEREAS it has been stipulated by you in the aforementioned Contract that the Contractor shall furnish you with a security issued by a reputable guarantor for the sum specified therein as security for compliance with the Contractor’s performance obligations in accordance with the Contract.
AND WHEREAS the undersigned, legally domiciled in [insert complete address of Guarantor], (hereinafter called the “Guarantor”), have agreed to give the Contractor a security.

Question is what do you mean by legally domiciled in and domicile in which country, is it in the Country where the project is executed?

There is also a write up in the special conditions as follows:

A foreign Bank providing the security shall have a correspondent Bank located in the country.

What do you mean by a correspondent Bank? What will this bank's responsibility?

Hello Wong,

Thank you for your question.

Firstly, as per definition   "Country" means the country in which the Site (or most of it) is located, where the Permanent Works are to be executed.

Legally domiciled is where the bank of another entity is seated/ registered.

Correspondent Bank is a local bank that has a partner bank in the Country.

Hope that answer your queries.

Construction Law

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Questions related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.


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