Performance risk: whether the surety is able to meet the obligation it guarantees should be considered. In Queensland, for example, if the contractor insisted, as part of a construction contract, that the contractor`s holding company had completed construction, it may find that the parent company does not have the necessary licence to do so and that the delivery of that company (or even the consent to carry out the work) may be illegal. The CMS guide below on guarantees in supply contracts illustrates the legal conditions for supply contracts in several European countries. The CMS guide deals with business-to-business supply contracts (hereafter referred to as “B2B contracts”). In some cases, country chapters also refer to specific provisions that apply to consumers without detailing them or in detail. BlueKey Lawyers can help you work with such agreements and ensure that your legal and financial risks are mitigated. Finally, it is always recommended that legal and financial advice be obtained before such agreements are concluded. Know your opponent; Who will the agreement be concluded with? If the contract is breached, can an appeal be appealed? Business benefits: how does the performance guarantee benefit the guarantor? A guarantee that does not benefit the company and thus violates a director`s obligation to retain a director can be cancelled by the company. This is no less of a problem when a parent company guarantees a subsidiary`s obligations, but it may be more difficult to demonstrate commercial benefits when a subsidiary guarantees the obligations of its parent company (although Section 187 of the Corporations Act can provide some support to 100% subsidiaries). Risk of implementation: If the agreement or guarantee is to be implemented, you must ensure that the entity with which the agreement was concluded can be held accountable under the jurisdiction in which the agreement was concluded.
For example, the entity that entered into your registration agreements in Australia or in a country where you can apply for legal action. The country chapters deal exclusively with national law.