Maintenance Guarantee

A Maintenance Guarantee is a written guarantee commitment issued by a bank at the request of a contractor or supplier to the owner or buyer. In engineering contracting, large equipment export, or long-term service contracts, the owner usually requires the contractor to repair defects during the warranty period (typically 1-2 years). If the contractor fails to fulfill its maintenance obligations, the owner may claim against the bank under the guarantee to cover the cost of self-repair or third-party repair. Use cases include international engineering, complete equipment export, EPC contracts, etc. Notes: The guarantee amount is usually 5%-10% of the contract price; the validity period should cover the warranty period, and attention should be paid to the release clause after expiry; claim conditions must be clear (e.g., claim may be made solely upon the owner's written statement); it should be distinguished from a Performance Guarantee, which guarantees the contract performance stage, while a Maintenance Guarantee guarantees maintenance obligations during the warranty period. In addition, a Maintenance Guarantee may be required to be an on-demand guarantee, which carries higher risk and requires careful assessment.