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The Bond Indemnity Agreement is a crucial document in New Zealand's commercial landscape, particularly in sectors requiring performance security or financial guarantees. This agreement is utilized when a party (principal debtor) needs to provide a bond to a beneficiary as security for their obligations, but requires a financial institution (surety) to issue this bond. The Bond Indemnity Agreement establishes the legal framework for this three-way relationship, protecting the surety's interests by ensuring they can recover any amounts paid out under the bond from the principal debtor. It is commonly used in construction contracts, tender submissions, and other commercial arrangements where performance security is required. The agreement must comply with New Zealand law, including the Contract and Commercial Law Act 2017, and typically includes detailed provisions regarding the bond amount, claim procedures, and enforcement mechanisms.

1. Parties: Identifies and defines all parties to the agreement: the Principal Debtor, the Surety/Guarantor, and the Beneficiary

2. Background: Sets out the context of the agreement, including the underlying obligation requiring the bond and the purpose of the indemnity

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes rules for interpretation

4. Bond Amount and Terms: Specifies the amount of the bond and its key terms, including duration and conditions for renewal

5. Indemnity Provisions: Details the surety's obligations to indemnify and the scope of the indemnity

6. Conditions for Calling on the Bond: Specifies the circumstances and process under which the beneficiary can make a claim on the bond

7. Principal Debtor's Obligations: Sets out the obligations of the principal debtor, including payment of premiums and compliance requirements

8. Surety's Rights and Remedies: Outlines the rights of the surety, including rights of subrogation and reimbursement

9. Default and Enforcement: Describes what constitutes default and the enforcement mechanisms available

10. Representations and Warranties: Contains statements of fact and promises made by the parties

11. General Provisions: Standard clauses covering notices, amendments, governing law, and dispute resolution