Performance Guarantee Claim Letter

When and how to use this letter

Claim a performance guarantee only after genuine contractor default — abandonment, insolvency, or material breach — because most guarantees are "on-demand" instruments and a wrongful call can itself create liability. Before sending, read the guarantee document line by line: it dictates the exact claim procedure, required documents, the claim window, and the expiry date. A claim that misses any procedural requirement can be rejected on technical grounds regardless of merit.

Match your claim documents precisely to what the guarantee demands — typically a written demand statement, evidence of the underlying default, and sometimes specific certificates. Banks examine documentary compliance strictly and will not look past missing paperwork to the merits. Send the claim by the method the guarantee specifies, and diary the expiry date: guarantees commonly require claims before a fixed date, after which they simply lapse.

Claim the correct amount. Some guarantees cover a fixed sum; others cover proven losses up to a cap — know which type you hold and claim accordingly, with a loss calculation attached where required. Over-claiming beyond the guarantee's terms invites rejection of the whole demand.

A non-obvious tip: notify the defaulting contractor in parallel that you are calling the guarantee, and preserve the right to pursue them for losses beyond the guaranteed sum. The guarantee is security, not a settlement — calling it does not extinguish your broader claim against the contractor for the full extent of your losses.

Frequently asked questions

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