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Guarantee Facility Agreement for Australia

Guarantee Facility Agreement Template for Australia

A comprehensive legal agreement governed by Australian law that establishes the terms and conditions under which a financial institution agrees to provide guarantee facilities to a corporate borrower. The document outlines the mechanism for issuing bank guarantees, performance bonds, or similar instruments, including facility limits, fees, conditions precedent, and ongoing obligations. It incorporates provisions compliant with Australian financial services regulations, including ASIC requirements and banking regulations, while establishing the rights and obligations of all parties involved in the guarantee facility arrangement.

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Guarantee Facility Agreement

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What is a Guarantee Facility Agreement?

The Guarantee Facility Agreement is a crucial document in Australian commercial and financial transactions where parties require bank guarantees or similar instruments to support their business operations. This agreement is commonly used when companies need ongoing access to bank guarantees for various purposes such as bid bonds, performance bonds, or rental guarantees. The document establishes the framework under which a financial institution will issue guarantees, including facility limits, conditions for issuance, fees, and the obligations of all parties. The agreement must comply with Australian financial services regulations and banking laws, incorporating necessary consumer protections and disclosure requirements. A Guarantee Facility Agreement typically includes detailed provisions for facility utilization, reporting requirements, events of default, and enforcement mechanisms, making it essential for businesses requiring regular access to bank guarantees.

What sections should be included in a Guarantee Facility Agreement?

1. Parties: Identifies all parties to the agreement including the financial institution, borrower, and guarantor(s)

2. Background: Contextual information explaining the purpose of the guarantee facility and relationship between parties

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles

4. Facility Establishment: Terms of the guarantee facility including limit, purpose, and availability

5. Guarantor Obligations: Core guarantee provisions, including scope of guaranteed obligations and nature of liability

6. Payments and Claims: Procedures for making claims under guarantees and payment obligations

7. Representations and Warranties: Standard representations and warranties from the guarantor

8. Undertakings: Ongoing obligations of the guarantor including financial covenants and reporting requirements

9. Events of Default: Circumstances constituting default and consequences

10. Fees and Costs: All fees, charges, and cost recovery provisions

11. Tax Provisions: Treatment of taxes, GST, and stamp duty

12. General Provisions: Standard boilerplate clauses including notices, amendments, and governing law

What sections are optional to include in a Guarantee Facility Agreement?

1. Multiple Guarantors: Additional provisions for multiple guarantors including joint and several liability

2. Security Provisions: Where specific security is required to support the guarantee obligations

3. Cross-Border Provisions: For international guarantors or cross-border transactions

4. Independent Legal Advice: Specific requirements where independent legal advice is mandatory

5. Bank Guarantee Mechanics: Detailed provisions for bank guarantee issuance and management

6. Digital Execution: Provisions for electronic execution and management of guarantees

7. Priority and Subordination: Where ranking of guarantee obligations needs to be established

8. Counter-Indemnity: Where separate indemnity provisions are required from the guarantor

What schedules should be included in a Guarantee Facility Agreement?

1. Facility Parameters: Details of guarantee facility limit, sub-limits, and pricing

2. Form of Guarantee: Template form(s) of guarantee to be issued under the facility

3. Conditions Precedent: List of required documents and conditions for facility establishment

4. Guarantee Issue Request Form: Standard form for requesting issuance of guarantees

5. Compliance Certificate: Template for periodic compliance reporting

6. Existing Guarantees: Schedule of any existing guarantees to be covered by the facility

7. Fee Schedule: Detailed breakdown of all applicable fees and charges

8. Authorized Signatories: List of persons authorized to request guarantees and execute documents

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok˰ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Australia

Publisher

tiktok˰

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions




















































Clauses
































Relevant Industries

Banking and Financial Services

Construction and Infrastructure

International Trade

Mining and Resources

Commercial Real Estate

Manufacturing

Retail

Energy and Utilities

Telecommunications

Government and Public Sector

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Commercial Operations

Credit

Company Secretariat

Operations

Project Management

Relevant Roles

Chief Financial Officer

Treasury Manager

Finance Director

Legal Counsel

Commercial Director

Risk Manager

Relationship Manager

Credit Manager

Company Secretary

Compliance Officer

Financial Controller

Project Manager

Operations Manager

Contract Administrator

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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