REFUND BOND
To: [Name of Beneficiary]
Reference is made to [Name of Agreement] (Contract No.: _______, the “Agreement”) dated _______ between [Company Name] (“Applicant”) and [Company Name] (“Beneficiary”). Upon request of Applicant, Bank hereby opens this irrevocable Bond (this “Bond”) for the maximum amount of [amount, currency] only (equivalent to ___% of the subject amount under the Agreement, hereafter referred to as the “Secured Amount”).
Bank covenants and agrees as follows:
1. If, after receiving an advance payment in the amount of [amount, currency] from Beneficiary, Applicant fails to deliver goods pursuant to the terms of the Agreement (an “Event of Default”), Bank shall pay Beneficiary an amount not exceeding the Secured Amount upon Bank’s receipt of (i) a notice in writing (a “Demand Notice”) from Beneficiary demanding that Bank perform its obligations under this Bond and describing the Event of Default in reasonable detail and (ii) the original of this Bond. The drawing under this Bond shall be made in lump sum only. All liabilities of Bank under this Bond shall be released and exonerated immediately upon such payment.
2. Bank shall perform its obligations only in accordance with a Demand Notice that complies with the terms hereof. Bank may rely solely on the presentation of a Demand Notice as a condition to its performance under this Bond.
3. Bank’s obligations hereunder shall be valid from [date] to [date] (the “Guarantee Period”). BENEFICIARY MAY MAKE A DEMAND ON BANK WITHIN THE GUARANTEE PERIOD BY DELIVERING PRESENTATION DOCUMENTS. SUCH DOCUMENTS MUST BE RECEIVED BY BANK NO LATER THAN [EXPIRY DATE].
4. Upon expiration of the Guarantee Period, this Bond shall immediately terminate and be of no further force and effect, and all the guaranty obligations of Bank under this Bond shall be immediately relinquished and released. Any demand received by Bank after expiration of the Guarantee Period (i.e., [date]) shall be null and void for all purposes.
5. Upon termination of Bank’s guarantee obligations under this Bond are terminated, Bank shall have the right to recover from Beneficiary and Beneficiary shall be obligated to return, the original of this Bond. Any failure to return the same, however, will not affect the termination of Bank’s guarantee obligations hereunder.
APPLICANT HEREBY CONSENTS TO THE FORM AND SUBSTANCE OF THIS PRO FORMA REFUND BOND AND HEREBY AUTHORIZES BANK TO ISSUE A BOND CONSISTENT WITH THIS PRO FORMA.
[Name of Applicant]
By: _______________________________
Authorized Signatory(ies)
Name:
Title: