Guarantees in New Zealand

Guarantees in New Zealand by Michael Lenihan is a comprehensive guide on guarantees in New Zealand law. It covers topics such as contractual requirements, the liability of guarantors, and insolvency.

FOREWORD by The Honourable Stephen Kós

As the author of this excellent new text observes, guarantees have been employed since the advent of civilisation. Civilisation is built upon enterprise; borrowing is essential to enterprise; the giving of security is a concomitant of borrowing; ergo, guarantees in one form or another are needed. Where guarantees are given, litigation and regulation follow. The earliest known example of the latter is found in the Code of Hammurabi. compiled nearly 4,000 years ago. No legal system has developed without laws regulating guarantees. 

A concomitant of substantial regulation and case law is the need for learned commentary to bring system and understanding to the subject. Michael Lenihan has therefore done New Zealand a very considerable service in producing this work. In doing so, he breaks new ground: no text dedicated to this subject has appeared in New Zealand previously. Alas, perhaps, his timing is excellent too: it is hardly coincidence that case law on guarantees tends to accelerate in the half-decade following any sharp economic downturn. In 2024, in the wake of the Covid pandemic and a persistent decline in consumer spending, New Zealand company liquidations reached a ten-year peak. 

Mr Lenihan is particularly well-qualified to write this text: he holds Masters degrees in law from both Canterbury and Cambridge Universities, and has lectured on this subject at Auckland University for many years. In the course of a wide-ranging civil practice, he has appeared in many of the leading guarantee and indemnity cases. He brings both substantial scholarship and considerable practical knowledge to the subject. If there is a practitioner better placed to write this text, that person does not come to mind. 

A particular feature of this text is its logical and attractive structure: each topic discussion commences with a neatly-distilled summary of key principles, and evolves from there as those principles are expanded and explained. Each of the leading Ne\v Zealand authorities is analysed within this framework. The writing is fluent, clear and direct. 

New Zealand has long needed a text of its own on this subject. Too long we have had to make do with the English and Australian texts. While providing excellent accounts of the law in their own jurisdictions, they do not address our particular legislation and barely scratch the surface of our case law. That omission has now been rectified by Mr Lenihan's splendid volume. He is to be congratulated for all the industry and insight he has brought to this endeavour.