Terms & Conditions of Letter of Guarantee (LG)
1- The Bank issues the LG in accordance with the provisions stipulated in this request as well as relevant rules, instructions and procedures. The Bank’s obligations shall be identified based on the wording of the LG.
2- If the Bank issues LG to the Client, the Client shall irrevocably and unconditionally authorize the Bank to:
2.1. Pay any amount arises from the LG to the beneficiary upon request regardless of Client notification or consent and irrespective of the validity of the beneficiary’s request or its entitlement to the amount of the guarantee.
2.2. Deduct any amount paid in connection with the guarantee from the Client’s account with the Bank without prior notice from the Bank to the Client. If the obligation currency is different than the account currency, collection shall be as per the prevailing exchange rate on the relevant date.
2.3. Collect any Amount arising out of the LG from the Client’s securities, rights or accounts falling under the Bank’s custody without the need to send a prior notice to the Client.
2.4. Amend the LG, based on the beneficiary’s request and at the Bank’s absolute discretion, either by extending its term or reducing its amount. In case of amendment, the Client shall remain fully liable for all its representations provided for herein.
3- The Client may request the Bank to amend the LG by extending its term or increasing its amount and the Bank shall have the right to accept or reject this amendment, depending on its absolute discretion.
4- The Bank may amend the LG by increasing its value based on the beneficiary’s request and the Client’s approval.
5- The Client shall pay the fees associated with issuing the LG as specified in the Banking Facilities Agreement concluded between the parties.
6- The client Acknowledge the unfettered right of the Bank to change LG fees from time to time at the bank’s absolute discretion, and to apply it on any new LG issuance, amendment or extension according to the notification sent by the Bank to the client.
7- The Client shall pay to the Bank all outstanding amounts and expenses related to the LG net and clear of any taxes, charges, expenses, fees, withholdings, executions or restrictions of whatsoever nature and irrespective of the party imposing them.
8- The Client shall increase the margin paid against issuing the LG upon the request of the Bank without disclosing the reasons. The margin amount should not be greater than the LG amount.
9- The Client acknowledges to provide the Bank with the original copy of the LG and discharge it of its obligations at the end of the guarantee validity. If the Client fails to do so, its representations shall remain valid despite the expiry of the guarantee’s term until the guarantee is returned to the Bank, or the Bank is provided with a legal discharge signed by the beneficiary, or after the expiry date of the buffer/ postal period as of the last date for the expiry of the guarantee, whichever is earlier.
10- The Client shall authorize the Bank to deduct the entire value of the guarantee from its account as cash margin plus any banking fees resulting therefrom in the absence of a credit facility agreement with the Bank.
11- The Bank accepts the Client’s instructions related to the account, whether issued by the Client, the agent, the authorized person in an Etimad/Wethaq platforms or his delegated person. All instructions received by the Bank shall be deemed correct, issued by the account holder and with his knowledge and consent.
12- The Client shall be liable for all operations executed by the Agent or the authorized person on its account, whether the relevant Agency has been issued pursuant to legal agency or delegation of authorities under the Articles of Association, Articles of Incorporation or partners resolution or otherwise. The Bank shall execute such instructions without any liability for any legal errors in the content of the agency or authorization or execution procedures.
13- The Bank’s books, records and accounts shall be deemed valid and conclusive and the Client acknowledges to pay all amounts thereunder. The Client may not raise any objections to such amounts, unless in cases of clear material errors.
14- All notices shall be enforceable if made under a written notice and delivered by hand, fax, telex, or any other recognized means of communication if such notices bear the signature of the Bank and the Client or their authorized persons.
15- This request and the LG shall be governed by, and construed in accordance with, Sharia’h and Sharia’h-compliant rule and regulations applicable in the Kingdom of Saudi Arabia.
16- Each dispute arises between the Bank and the Client shall be settled by competent courts in the Kingdom of Saudi Arabia, if no amicable solution is reached, In case of any conflict between the Arabic and English texts, the Arabic text shall be prevail.
