Common use of Security for Guarantee Clause in Contracts

Security for Guarantee. As security for the obligation of the Builder to remedy defects under Article 10.3(a) or to reimburse the Owner for replacement or repair expenses under Article 10.3(b), Builder shall deliver to Owner a bank guarantee, in a form and with a first class bank reasonably acceptable to Owner, in the amount of five percent (5%) of the Contract Price of the Vessel. Such warranty bank guarantee shall be delivered to Owner on or before the Delivery Date and shall be effective for a term of the Guarantee Period plus six months from the expiration of the Guarantee Period. Owner may refuse to accept delivery of the Vessel and make the final installment payment unless and until Builder delivers said warranty bank guarantee.