The Corporate Performance Guarantee is essential in commercial transactions where a stronger entity provides financial backing for a weaker entity's obligations. Under Australian law, this document is commonly used in project finance, construction contracts, and major commercial agreements where the contract beneficiary requires additional security for performance obligations. The guarantee typically includes provisions for direct enforcement against the guarantor, representations about corporate capacity under Australian law, and compliance with local security registration requirements. The document becomes particularly relevant when a subsidiary or special purpose vehicle lacks sufficient financial strength or track record to secure a contract independently, requiring its parent company or a stronger affiliated entity to provide a Corporate Performance Guarantee to support its obligations.
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1. Parties: Identifies the Guarantor (typically parent company), the Principal (subsidiary/main contracting party), and the Beneficiary
2. Background: Sets out the context of the underlying agreement and the reason for providing the guarantee
3. Definitions: Defines key terms including 'Guaranteed Obligations', 'Underlying Agreement', and other relevant terms
4. Guarantee and Indemnity: Core section establishing the guarantee obligations and indemnity provisions
5. Scope of Guarantee: Defines the extent of guaranteed obligations and any limitations
6. Nature of Guarantee: Establishes that the guarantee is unconditional, irrevocable, and continuing
7. Demands and Payments: Procedures for making demands under the guarantee and payment requirements
8. Representations and Warranties: Guarantor's confirmations about capacity, authority, and financial condition
9. Preservation of Rights: Beneficiary's rights preservation and ability to pursue other remedies
10. Costs and Interest: Provisions for recovery of enforcement costs and interest on late payments
11. Governing Law and Jurisdiction: Specifies Australian law as governing law and jurisdiction for disputes
12. Notices: Communication procedures between parties
13. General Provisions: Standard boilerplate clauses including severability, variation, and assignment
1. Security: Include when the guarantee is secured by specific assets or security interests
2. Financial Covenants: Include when the guarantor must maintain certain financial metrics
3. Foreign Law Requirements: Include when the guarantor is a foreign corporation requiring additional formalities
4. Multiple Guarantors: Include when there are multiple guarantors to address joint and several liability
5. Step-In Rights: Include when the beneficiary has rights to take over the underlying contract
6. Limitation of Liability: Include when there are agreed caps or limitations on the guarantee amount
7. Priority and Subordination: Include when there are multiple creditors or security interests requiring priority arrangements
1. Form of Demand: Template for making valid demands under the guarantee
2. Underlying Agreement: Copy or summary of the agreement being guaranteed
3. Corporate Authority: Evidence of corporate approvals and authority to provide guarantee
4. Financial Requirements: Details of any financial covenants or requirements if applicable
5. Security Details: Details of any security provided in support of the guarantee
6. Guarantee Limitations: Detailed breakdown of any limitations or caps on liability
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