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Bank Counter Guarantee

Bank Counter Guarantee Template for New Zealand

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Key Requirements PROMPT example:

Bank Counter Guarantee

"I need a Bank Counter Guarantee for NZD 500,000 to secure a construction project bid, with ABC Bank as guarantor and XYZ Construction Ltd as principal debtor, valid until March 15, 2025, including provisions for electronic demand submission."

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Document background
The Bank Counter Guarantee is a crucial financial instrument used in New Zealand business transactions where one party seeks financial security for the performance of contractual obligations by another party. This document is commonly used in scenarios such as construction projects, tender submissions, advance payment security, and performance guarantees. The guarantee must comply with New Zealand banking regulations, including the Reserve Bank of New Zealand Act 1989 and the Contract and Commercial Law Act 2017. It contains essential information such as the guarantee amount, validity period, demand requirements, and payment terms. The document is structured to protect all parties' interests while providing a clear mechanism for claim and payment, typically used when there's a need for an independent financial institution to provide security for commercial obligations.
Suggested Sections

1. Parties: Identifies the bank issuing the guarantee, the principal debtor (applicant), and the beneficiary

2. Background: Outlines the context of the guarantee, including reference to the underlying transaction or obligation

3. Definitions: Defines key terms used throughout the guarantee document

4. Guarantee Amount: Specifies the maximum amount of the guarantee and currency

5. Scope of Guarantee: Details what obligations are covered by the guarantee

6. Duration and Validity: Specifies the effective date, expiry date, and any automatic extension provisions

7. Demand Requirements: Specifies the form and process for making a demand under the guarantee

8. Payment Terms: Details the conditions and timing of payment upon valid demand

9. Bank's Rights and Obligations: Outlines the rights, obligations, and limitations of the bank's liability

10. Governing Law and Jurisdiction: Specifies New Zealand law as governing law and jurisdiction for disputes

11. Notices: Details how formal communications between parties should be made

12. Execution: Signature blocks and execution requirements

Optional Sections

1. Counter-Indemnity: Used when the principal debtor must provide indemnity to the bank - typically in separate document but may be included

2. Assignment: Include when transfer rights need to be specified, particularly if assignment is prohibited or restricted

3. Multiple Beneficiaries: Include when there is more than one beneficiary, specifying their rights and relationships

4. Reduction Provisions: Include when the guarantee amount may be reduced over time or upon certain events

5. Language Declaration: Include when the guarantee might be used internationally to specify English as controlling language

6. Force Majeure: Include when specific force majeure provisions are required beyond standard banking practice

7. Special Conditions: Include when there are additional conditions specific to the transaction or parties

Suggested Schedules

1. Form of Demand: Template for making a valid demand under the guarantee

2. Underlying Contract Details: Summary or extract of the underlying contract or obligation being guaranteed

3. Fee Schedule: Details of bank fees and charges related to the guarantee

4. Authorized Signatories: List of persons authorized to make demands or communications under the guarantee

5. Supporting Documents: List and/or copies of required supporting documents referenced in the guarantee

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant Industries

Banking and Financial Services

Construction and Infrastructure

International Trade

Real Estate Development

Manufacturing

Energy and Utilities

Government and Public Sector

Mining and Resources

Telecommunications

Retail and Commerce

Relevant Teams

Legal

Finance

Treasury

Risk Management

Commercial Operations

Procurement

Contract Administration

Credit Control

Corporate Banking

Project Management

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Contract Manager

Commercial Director

Risk Manager

Legal Counsel

Banking Relationship Manager

Project Finance Manager

Credit Manager

Procurement Manager

Company Secretary

Financial Controller

Business Development Manager

Industries
Reserve Bank of New Zealand Act 1989: Establishes the regulatory framework for banks and banking system in New Zealand, including oversight of financial instruments like bank guarantees
Contract and Commercial Law Act 2017: Governs the formation, interpretation, and enforcement of contracts in New Zealand, including financial contracts like bank guarantees
Anti-Money Laundering and Countering Financing of Terrorism Act 2009: Sets requirements for customer due diligence and verification procedures that banks must follow when issuing financial instruments
Banking (Prudential Supervision) Act 1989: Provides regulatory framework for prudential supervision of banks and their financial obligations
Fair Trading Act 1986: Ensures fair trading practices and prohibits misleading conduct in trade, affecting how bank guarantees are marketed and documented
Personal Property Securities Act 1999: Relevant for registration and enforcement of security interests, which may be related to bank guarantees
Financial Markets Conduct Act 2013: Regulates financial products and services, including aspects of bank guarantees when they constitute financial products
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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