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Example of Retention Money Guarantee

This document is a retention money guarantee for a construction contract. It guarantees payment to the beneficiary/employer of any sums up to the guaranteed amount of RM[amount] if the contractor fails to rectify defects. The guarantee expires [date] unless extended if the performance certificate has not been issued due to the contractor. It is governed by Malaysian law and the bank will pay upon receiving the beneficiary's authenticated written demand and statement before the expiry date.

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Don Clerance Denzil Weerakkody
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490 views2 pages

Example of Retention Money Guarantee

This document is a retention money guarantee for a construction contract. It guarantees payment to the beneficiary/employer of any sums up to the guaranteed amount of RM[amount] if the contractor fails to rectify defects. The guarantee expires [date] unless extended if the performance certificate has not been issued due to the contractor. It is governed by Malaysian law and the bank will pay upon receiving the beneficiary's authenticated written demand and statement before the expiry date.

Uploaded by

Don Clerance Denzil Weerakkody
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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EXAMPLE OF RETENTION MONEY GUARANTEE

Brief description of Contract …………………………………………………………………………


………………………………………………………………………………………………………………………..

Name and address of Beneficiary………………………………………………………………….


……………………………… of …………………………………………………………………………………..
………………………………………………………. (whom the Contract defines as the
Employer).

We have been informed that …………………………………………………… (hereinafter


called the "Principal") is your Contractor under such Contract and wishes
to receive early payment of the retention money, for which the Contract
requires him to obtain a guarantee.

At the request of the Principal, we ……………………………………………….. (name


of bank) hereby irrevocably undertake to pay you, the
Beneficiary/Employer, any sum or sums not exceeding in total the amount
of Ringgit Malaysia ……………………………………… ………………………… (RM
…………………………….) (the "guaranteed amount") upon receipt by us of your
demand in writing and your written statement stating:

(a) that the Principal has failed to carry out his obligation(s) to
rectify certain defect(s) for which he is responsible under the
Contract, and

(b) the nature of such defect(s).

At any time, our liability under this guarantee shall not exceed the total
amount of retention money released to the Principal by you, as evidenced
by your notices issued under the Conditions of Contract with a copy being
passed to us.

Any demand for payment must contain your signature(s) which must be
authenticated by your bankers or by a notary public. The authenticated
demand and statement must be received by us at this office on or before
(the date 28 days after the expected expiry of the Defects Notification
Period for the Works) (the "expiry date"), when this guarantee shall
expire and shall be returned to us.

We have been informed that the Beneficiary may require the Principal to
extend this guarantee if the performance certificate under the Contract
has not been issued by the date 28 days prior to such expiry date. We
undertake to pay you such guaranteed amount upon receipt by us, within
such period of 28 days, of your demand in writing and your written
statement that the performance certificate has not been issued, for
reasons attributable to the Principal, and that this guarantee has not been
extended.

This guarantee shall be governed by the laws of Malaysia.

Date and Signature(s)

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