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Not only the guarantee format, i.e. a direct or indirect guarantee, and the type of conditions of payment, for example a first demand or a guarantee requiring the presentation of prescribed documents, but also the determination of other clauses is primarily a concern of the parties to the underlying contract. This can explained by the fact that the guarantee is a product of the undrlying contract, and the fac that the bank enters into the contract of guarantee for the risk and account of its customer. Therefore, the various clauses which the parties to the underlying contract may have agreed upon must be acceptable to the bank too.
In general, it is vital for all parties concerned that the text of the document should provide absolute clarity as regard the nature of the security, namely as independent guarantee in contradiction to an accessory surety ship. The text of guarantee invariably contains a reference to the underlying contract. Also, name of parties, conditions precedent, period of validity and expiry date, extension terms, the amount of the guarantee and its reduction, force majeure, set-off, assignment, jurisdiction and applicable law are typical provisions in international guarantees.
All above mentioned provisions are discussed in this article