Performance Guarantee Bond Template for New Zealand

Performance Guarantee Bonds are essential financial instruments used in New Zealand to provide security for significant commercial and project-based transactions. They are particularly common in construction, infrastructure, and large-scale commercial projects where one party needs assurance of another's performance. The document is designed to comply with New Zealand contract law, financial regulations, and commercial practice, typically involving a bank or insurance company as guarantor. A Performance Guarantee Bond includes critical information such as the guaranteed amount, duration, calling conditions, and payment terms. It's commonly required in tender processes, major construction contracts, and significant supply agreements, providing beneficiaries with readily accessible financial security if the principal fails to meet their obligations.

1. Parties: Identifies the three key parties: the Guarantor (bank/insurance company), the Principal (party whose performance is being guaranteed), and the Beneficiary (party receiving the guarantee)

2. Background: Sets out the context of the underlying agreement requiring the guarantee and the purpose of this bond

3. Definitions: Defines key terms used throughout the document, including 'Guaranteed Obligations', 'Maximum Liability Amount', and 'Expiry Date'

4. Guarantee and Indemnity: Core section establishing the guarantee, including the scope and nature of the guaranteed obligations

5. Maximum Liability: Specifies the maximum amount for which the guarantor can be liable under the bond

6. Duration and Expiry: Specifies when the bond becomes effective and when it expires or terminates

7. Demand Requirements: Sets out the process and requirements for making a valid demand under the bond

8. Payment Obligations: Details the guarantor's obligations when a valid demand is made

9. Discharge and Release: Specifies conditions under which the guarantor will be discharged from obligations

10. Assignment and Transfer: Addresses whether and how the bond may be assigned or transferred

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

12. Execution: Formal execution block for all parties to sign