Document background
Contract Performance Guarantees are essential security instruments in Saudi Arabian commercial transactions, particularly in construction, infrastructure, and government contracts. A Contract Performance Guarantee is typically required when a contractor or service provider enters into a significant commercial contract, providing the beneficiary with financial security against non-performance or default. The guarantee amount usually ranges from 5% to 10% of the contract value, though government contracts may require higher percentages. Under Saudi law, these guarantees must comply with Sharia principles and SAMA regulations, making them unconditional, irrevocable, and payable on first demand. The document serves as an independent obligation from the underlying contract, ensuring quick access to compensation for the beneficiary without the need for court proceedings to prove default.
