The Guaranty Agreement is a fundamental legal instrument in New Zealand commercial practice, used when additional security is required for financial or performance obligations. This document is typically employed in situations where a creditor requires extra assurance beyond the principal debtor's covenant, such as in loan agreements, lease arrangements, or major commercial contracts. The agreement must comply with New Zealand law, particularly the Property Law Act 2007 and related legislation, and typically includes comprehensive provisions about the nature and extent of the guarantee, enforcement mechanisms, and the guarantor's obligations. The Guaranty Agreement is particularly important in commercial financing where parent companies guarantee subsidiaries' obligations, directors guarantee company debts, or third parties provide additional security for borrowers.

1. Parties: Identifies the Guarantor(s), the Creditor, and the Principal Debtor

2. Background: Sets out the context of the guarantee, including details of the primary obligation being guaranteed

3. Definitions: Defines key terms used throughout the agreement

4. Guarantee and Indemnity: Core provision containing the guarantee obligations and indemnity

5. Extent of Guarantee: Specifies the scope and limitations of the guarantee, including maximum liability if applicable

6. Continuing Security: Establishes that the guarantee is continuing and covers future obligations

7. Guarantor's Obligations: Details specific obligations, warranties and undertakings of the guarantor

8. Preservation of Rights: Preserves creditor's rights in various circumstances like bankruptcy or variation of primary obligation

9. Payments: Specifies payment terms, currency, and method of payment

10. Costs and Expenses: Addresses liability for legal and enforcement costs

11. Notices: Sets out how formal notices must be given between parties

12. General Provisions: Contains standard boilerplate clauses including governing law, jurisdiction, and assignment