The Financial Performance Guarantee is a crucial financial instrument in New Zealand's commercial landscape, commonly used to provide security and assurance in business transactions. This document is particularly valuable when one party requires certainty about another party's ability to fulfill financial or performance obligations. The guarantee creates a legally binding commitment from the guarantor (often a financial institution) to step in and fulfill specified obligations if the principal debtor fails to do so. Governed by New Zealand law, including the Financial Markets Conduct Act 2013 and related regulations, this document includes comprehensive details about the guarantee's scope, conditions for calling on the guarantee, payment terms, and enforcement mechanisms. It's frequently used in construction projects, international trade, large commercial transactions, and government contracts where performance security is essential.
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1. Parties: Identification of the Guarantor, the Beneficiary, and the Principal Debtor
2. Background: Context of the guarantee, including the underlying obligation being guaranteed
3. Definitions and Interpretation: Key terms used in the guarantee and rules for interpretation
4. Guarantee and Indemnity: Core guarantee obligations and indemnification provisions
5. Extent of Guarantee: Scope and limitations of the guarantee, including maximum liability amount
6. Nature of Guarantee: Continuing, irrevocable and unconditional nature of the guarantee
7. Payments: Payment obligations, timing, and method of payment
8. Demand Requirements: Process and requirements for making a demand under the guarantee
9. Guarantor Representations and Warranties: Statements of fact and assurances given by the guarantor
10. Protection of Rights: Preservation of beneficiary's rights and remedies
11. Costs and Expenses: Allocation of costs related to the guarantee
12. Notices: Communication requirements and contact details
13. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and amendments
1. Security Arrangements: Details of any security provided to support the guarantee - include when specific assets are being pledged
2. Multiple Guarantors: Joint and several liability provisions - include when there is more than one guarantor
3. Counter-Indemnity: Principal debtor's obligation to indemnify guarantor - include when requested by guarantor
4. Step-In Rights: Guarantor's rights to assume principal debtor's position - include in complex commercial arrangements
5. Currency Provisions: Rules for handling multiple currencies - include for international guarantees
6. Tax Gross-Up: Provisions for tax implications - include when tax may affect guarantee payments
7. Financial Covenants: Ongoing financial requirements for guarantor - include for long-term guarantees
1. Form of Demand: Template for making a valid demand under the guarantee
2. Guaranteed Obligations: Detailed description of the obligations being guaranteed
3. Calculation of Liability: Method for calculating the guaranteed amount and any adjustments
4. Security Details: Details of any security arrangements and secured assets
5. Guarantor Information: Corporate information and resolutions authorizing the guarantee
6. Principal Debtor Information: Details of the underlying obligation and principal debtor
7. Conditions Precedent: List of documents and conditions required before guarantee becomes effective
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