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Construction Bank Guarantee
"I need a Construction Bank Guarantee for a NZD 5 million commercial building project in Auckland, where ABC Construction is the contractor and First National Bank will provide a guarantee of 10% of the contract value, with the guarantee expiring on March 15, 2025."
1. Parties: Identifies the three key parties: the Bank (Guarantor), the Contractor (Principal), and the Project Owner (Beneficiary)
2. Background: Outlines the underlying construction contract details and the requirement for the bank guarantee
3. Definitions: Defines key terms used in the guarantee including 'Guaranteed Sum', 'Expiry Date', 'Demand', and 'Construction Contract'
4. Guarantee and Undertaking: The bank's primary obligation to pay the guaranteed sum upon valid demand
5. Maximum Liability: States the maximum amount of the bank's liability under the guarantee
6. Conditions for Payment: Specifies the conditions and process for making a valid demand under the guarantee
7. Term and Expiry: Details when the guarantee becomes effective and when it expires
8. Reduction and Release: Conditions under which the guaranteed amount may be reduced and when the guarantee will be released
9. Assignment: Provisions regarding whether the guarantee can be assigned by any party
10. Governing Law and Jurisdiction: Specifies that New Zealand law governs the guarantee and determines jurisdiction for disputes
1. Multiple Beneficiaries: Required when there are multiple project owners or beneficiaries, detailing how the guarantee operates in such circumstances
2. Step-down Provisions: Optional section for when the guarantee amount reduces in stages aligned with construction milestones
3. Counter-Indemnity: Sometimes included when the bank requires specific indemnity from the contractor beyond standard terms
4. Electronic Presentation: Required when demands can be made electronically, specifying the process and requirements
5. Currency Provisions: Needed when the guarantee amount is in a currency other than New Zealand dollars
1. Schedule 1 - Form of Demand: Template for making a valid demand under the guarantee
2. Schedule 2 - Construction Contract Details: Key details of the underlying construction contract including project description, contract number, and dates
3. Schedule 3 - Bank Contact Details: Specific contact information and procedures for submitting demands or communications
4. Appendix A - Step-down Schedule: If applicable, details the schedule of guarantee amount reductions linked to project milestones
5. Appendix B - Special Conditions: Any special or additional conditions specific to the particular guarantee or project
Authors
Construction
Infrastructure
Real Estate Development
Banking and Financial Services
Public Works
Commercial Property
Residential Development
Industrial Construction
Engineering
Government and Public Sector
Legal
Finance
Commercial
Project Management
Risk and Compliance
Construction
Procurement
Contract Administration
Business Development
Treasury
Project Manager
Construction Manager
Contract Administrator
Financial Controller
Bank Manager
Legal Counsel
Commercial Director
Risk Manager
Development Manager
Quantity Surveyor
Chief Financial Officer
Project Director
Construction Director
Procurement Manager
Company Secretary
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