Common Terms Agreement Template for New Zealand

A Common Terms Agreement is a critical document in New Zealand's commercial finance sector that establishes shared legal provisions across multiple financing facilities. When you're dealing with complex lending arrangements involving several facilities, lenders, or borrowers, this agreement eliminates duplication by consolidating common terms that would otherwise be repeated in each separate facility agreement.

When do you need this document?

You'll need a Common Terms Agreement when structuring multi-facility financing arrangements such as syndicated loans, project finance deals, or corporate banking facilities with multiple tranches. This document is essential if you're a borrower seeking financing from multiple lenders under different facilities, or if you're a lender participating in a syndicated arrangement. Investment projects requiring both term loans and revolving credit facilities commonly use this structure, as do large corporate refinancing deals where existing debt is being restructured across multiple new facilities. The agreement is also valuable in acquisition financing where different tranches serve distinct purposes, such as senior debt, mezzanine financing, and working capital facilities.

Key legal considerations

The agreement must carefully define the relationship between common terms and facility-specific provisions to avoid conflicts or ambiguities. Your representations and warranties section should be comprehensive yet tailored to your specific circumstances, as these statements form the foundation for lender protection. Covenant provisions require careful drafting to ensure they're appropriate across all facilities while maintaining operational flexibility. The events of default section needs particular attention, as defaults under one facility typically trigger cross-default provisions across all facilities. Security arrangements must be clearly coordinated, especially regarding the roles of security trustees and enforcement procedures. You should also address intercreditor relationships, including subordination arrangements and voting procedures for amendments or waivers.

Legal requirements in New Zealand

Under the Contract and Commercial Law Act 2017, your Common Terms Agreement must meet standard contract formation requirements including offer, acceptance, and consideration. The Personal Property Securities Act 1999 governs any security interests in personal property, requiring proper registration and priority rules. If corporate parties are involved, the Companies Act 1993 mandates that companies have proper authority to enter into the agreement, typically requiring board resolutions or shareholder approval for significant financing arrangements. The Property Law Act 2007 applies to any real property security provisions, while the Fair Trading Act 1986 prohibits misleading or deceptive conduct in negotiations. Electronic execution is permitted under the Contract and Commercial Law Act 2017, but you must ensure compliance with any specific facility agent or lender requirements for original signatures or certified copies.