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The Bid Bond Tender Guarantee is a crucial document in New Zealand's commercial and public procurement landscape, particularly for high-value tenders and government contracts. It serves as a risk mitigation tool for tender issuers, ensuring serious participation from bidders and protecting against frivolous bids or post-award withdrawals. The guarantee typically represents 1-5% of the tender value and remains valid from tender submission until shortly after the award decision. This financial instrument, governed by New Zealand law, includes specific details about the tender, parties involved, guarantee amount, validity period, and conditions for demand. The document becomes especially relevant in construction, infrastructure, and public sector projects where the tender issuer requires security against the risk of bidders failing to proceed with the contract if awarded.

1. Parties: Identifies the key parties: (1) the Bank/Financial Institution issuing the guarantee, (2) the Beneficiary (tender issuer), and (3) the Principal (tender participant)

2. Background: States the context of the tender, reference numbers, and confirmation that the Principal is participating in the tender process

3. Definitions: Defines key terms used in the guarantee including 'Tender', 'Guarantee Amount', 'Expiry Date', and 'Demand'

4. Guarantee: Core section stating the bank's unconditional undertaking to pay the specified amount upon demand

5. Guarantee Amount: Specifies the maximum amount of the guarantee in numbers and words

6. Validity Period: States the effective date and expiry date of the guarantee

7. Conditions for Demand: Specifies the circumstances under which the guarantee can be called upon

8. Form of Demand: Describes the required format and content of any demand under the guarantee

9. Payment Terms: States the timeline and method for payment upon receipt of a valid demand

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

11. Notices: Details how and where notices should be delivered to all parties