Terms and Conditions

1. Overview

The Magenta Guarantee is a contract of guarantee between Magenta and the Homeowner, which benefits the Homeowner by protecting their investment in the Works on their Property. The Magenta Guarantee ensures that Homeowners will not lose their deposit or milestone payments made for Works that have not been completed (to the extent/amount specified in these Terms and Conditions).

If the Franchisee enters liquidation, Magenta will answer for the debts and obligations owed to the Homeowner (to the extent provided in these Terms and Conditions).

If the Franchisee enters into liquidation before it has completed the Works, Magenta will pay the difference between:

(i)           The Works paid for by the Homeowner (including any deposit paid); and

(ii)          The value of the Works completed by the Franchisee (including the cost of building consents and the value of any products or services received).

Period of cover: Cover by the Magenta Guarantee will begin on Commencement Date and end on the Practical Completion Date.  

2. Disclosures

These Terms and Conditions set out the rights and obligations of Magenta and Homeowners under the Magenta Guarantee. Please ensure that you have read and understood these Terms and Conditions. If you have any questions, please contact Magenta using the details in clause 11.

The Consumer Guarantees Act 1993 may apply to Works provided by a Franchisee. If this Act applies, nothing in these Terms and Conditions will limit or exclude the Homeowner’s rights under that Act.

The Magenta Guarantee is not insurance and only applies when a Franchisee cannot meet specific pre-completion obligations because it has entered into liquidation.

Consumer Guarantees Act 1993

The Consumer Guarantees Act 1993 applies to goods and services provided by the building industry, however, it does not apply to buildings (covered in the Building Act 2004).

The Consumer Guarantees Act 1993 provides that, during the supply of services:

·               A tradesperson must act with reasonable skill and care;

·               The materials must be of an acceptable quality and fit for purpose; and

·               The work must be completed in a timely manner.

If these guarantees are not met, the building work must be remedied by the tradesperson or an alternative tradesperson, at no extra cost to the Homeowner.  Breaches of these guarantees are not covered by the Magenta Guarantee.

Building Act 2004

The Building Act 2004 contains implied warranties that apply to residential building contracts. These warranties apply regardless of any contractual provision to the contrary, and begin on the completion of the building work and last for 10 years.

Building work must:

·               Be carried out in a proper manner, in accordance with the plans and specifications and in accordance with the building consent;

·               Be carried out with reasonable care and skill and be completed by the completion date or in the absence of a completion date, within a reasonable time;

·               Use suitable materials (and unless stated in the contract, they must be new);

·               Be fit for purpose, if the building contract sets out a particular purpose and the owner relies on the skills of the builder; and

·               Be suitable for occupation on the completion, if the building is to be occupied on completion.

If there is a breach of these warranties then the builder will be required to remedy the breach (if it can be remedied). If the breach cannot be remedied, the builder will need to compensate the owner for any loss in value of the building work below the price paid for the work or the owner may cancel the building contract.

The Building Act 2004 also sets out a 12-month defect period, which requires the builder to remedy any defect inthe building work that occurs within 12 months of completion.

These Building Act implied warranties are not covered by the Magenta Guarantee.

Five-day cancellation period

Magenta offers a 5-day cooling down period if Homeowners change their mind about the Magenta Guarantee. Beginning on the Commencement Date, Homeowners have five (5) Working Days to cancel the Guarantee. A Homeowner must give Magenta written notice of their intention to cancel the Guarantee including, their name, Property address and Guarantee Number.

Homeowners can send their notice to:

·               PO Box 37941, Parnell, Auckland 1151; or

·               info@magentacover.com

If Homeowners cancel the Guaranteewithin five (5) Working Days, the Guarantee Fee will be refunded to the bankaccount used to purchase the Guarantee.

3. What our Guarantee covers

In the event that a Franchisee enters into liquidation, Magenta covers Homeowners payments made to the Franchisee for uncompleted Works.

A Franchisee may not be able to complete the Works set out in a Works Contract because they have entered into liquidation.

In the event that a Franchisee enters into liquidation, Magenta will repay any amounts paid by the Homeowner to theFranchisee, for Works which have not been completed. Where the Homeowner has paid for Works which have been partially completed, Magenta will evaluate the value of the completed Works (including the cost of building consents and the value of any products or services received) and calculate the amount payable to the Homeowner under the Guarantee.

The maximum total cover for all claims under the Magenta Guarantee is $50,000 or 20% of the Contract Price(whichever is lesser).

Period of cover:

Magenta Guarantee cover is available to Homeowners from the Commencement Date until the Practical Completion Date

4. How much it costs

The Magenta Guarantee costs 1.5% of the Contract Price, (with a minimum required Guarantee Fee of $200 (incl GST) and a maximum fee of $3,750 (incl GST)).

5. Application process

The Magenta Guarantee will be offered to Homeowners when they enter into a Works Contract with a Franchisee. If a Homeowner opts out of the Guarantee they will be required to complete a Waiver Form confirming that they have elected to have no Guarantee.

When a Homeowner opts into the Guarantee, they will be required to complete an online application form which will be submited to Magenta. Homeowners will need to pay the Guarantee Fee (which costs 1.5% of the Contract Price with a minimum Guarantee Fee of $200 (incl GST) and a maximum fee of $3,750 (incl GST)) directly to Magenta by bank transfer.

Payment of the Guarantee Fee does not signify acceptance of the Application. Homeowners will be notified if Magenta has accepted or declined the Application. Homeowners will receive a refund of the Guarantee Fee if Magenta has declined their Application.

Magenta will consider the following factors before accepting Applications:

·               Contract Price for the Works;

·               Scale of the Works;

·               Estimated length of time for completion of the Works;

·               Whe ther the Works have already begun; and

·               Other factors that Magenta considers relevant.

Acceptance of Applications is at the sole and unfettered discretion of Magenta.

If a Homeowner provides incorrect information or withholds relevant information which may affect Magenta’s decision to accept their Application, the Guarantee may be cancelled.

When Magenta accepts an Application, the Homeowner will receive a signed guarantee certificate together with a tax invoice and receipt as confirmation of their cover by the Guarantee in accordance with these Terms and Conditions. The Guarantee comes into force when Homeowners receive their receipt from Magenta (“Commencement Date”).

6. What is not covered by our Guarantee

Additional or Advance payments

If Homeowners make additional or advance payments, other than specified in the Works Contract, those payments will not be covered by the Guarantee. This means that if a Franchisee goes into liquidation, Magenta will not cover any additional payments and the payments will not be factored into the calculation used to determine the amount payable to Homeowners by Magenta.

Alternative tradespersons

If Homeowners engage additional tradespersons(not supplied by a Franchisee) to carry out building works on their Property, those works will not be covered by the Guarantee. It is the Homeowner’s responsibility to ensure that all the building works they intend to be completed by the Franchisee, and covered by the Guarantee, are included in the Works Contract.

Additional Works

The Magenta Guarantee only covers the Works specified in the Works Contract. Therefore, the Homeowner must request permission from Magenta if they require additional works (not listed in the Works Contract) valued greater than $5,000 to be covered under the Guarantee. If the cost of the additional works increases the Contract Price significantly, then the Homeowner may need to pay a further Guarantee fee.

If the Homeowner agrees with the Franchisee to the completion of additional works not listed in the Works Contract, without Magenta’s permission, those additional works will not be covered by the Guarantee.

New Works Contracts

The Magenta Guarantee only covers the Works Contract that is submitted with the Application. Any new or additional Works Contracts, even for the same Property, are not covered by this Guarantee.

If a Homeowner wants the protection of the Guarantee for a new Works Contract, they will need to apply for a new Guarantee.

7. Homeowner obligations

The success of this Guarantee requires the Homeowner’s timely co-operation. If the Homeowner does not comply with these obligations, then the Guarantee may be cancelled.

Homeowners must:

·               Notify Magenta by completing a Claim Form and sending it to Magenta as soon as possible when they become aware of a problem with their Franchisee, which they believe may lead to losing their deposit or the Works not being completed;

·               Gain Magenta’s consent if they wish to alter the Works or the services that the Franchisee provides under the Works Contract (if the value of additional works is greater than $5,000);

·               Provide Magenta with reasonable access to their Property to assess a claim under this Guarantee;

·               Provide Magenta with all necessary information regarding a claim made under this Guarantee; and

·               Follow all reasonable and lawful instructions by Magenta in relation to the Guarantee.

Homeowners must not:

·               Cancel their Works Contract or agree to new terms without gaining Magenta’s consent;

·               Engage another tradesperson to complete the Works without Magenta’s permission;

·               Attempt to complete the Works themselves; or

·               Keep paying their Franchisee under the Works Contract if they become aware it may not be able to fulfil its obligations.

8. Making a claim

If Homeowners become aware of aproblem with their Franchisee and they believe that the Franchisee will not be able to begin or complete the Works, they must notify Magenta as soon as possible. If Homeowners do not notify Magenta of their claim within a reasonable time, Magenta may no longer be liable for the claim.

To make a claim under this Guaranteethe Homeowner must complete a Claim Form (available at www.magentacover.com) and supply that to Magenta.

Magenta will assess the claim and notify the Homeowner of its decision within a reasonable time. If the claim is declined, Magenta will provide its reasons for declining. If the claim is approved then Magenta will calculate the amount owed to the Homeowner and make the payment to the bank account used to pay the Guarantee Fee, or an alternative bank account (if requested).

Guarantee cover calculations:

Magenta will deduct the value of the Works already completed and any products or services received to date (including the costs of consents) from the sum paid by the Homeowner to the Franchisee to date. Magenta will repay any amounts paid by the Homeowner for Works that have not been completed.  


The Homeowner has signed a build contract to the value of $200,000 and paid a $25,000 deposit and $30,000 for the next milestone in the Works Contract. The value of the work completed by the Franchisee is $20,000. The Franchisee has entered liquidation and will not complete the remaining Works. Magenta will repay the $35,000 that the Homeowner has paid for Works that have not been completed.

9. Practical Completion Date

The Practical Completion Date occurs when the services covered in the Works Contract are substantially completed, as follows:

(1)          For concept and feasibility / concept design and estimation works, the Practical Completion date occurs once the final concept designs are supplied by the Franchisee.

(2)          For working drawings and costing / detailed design, planning and costing Works, the Practical Completion date occurs when the final working drawings and cost estimates are supplied by the Franchisee.

(3)          For building Works, the Practical Completion date occurs when the Works have been substantially finished and the Property can be used by the Homeowner for its intended purpose.

The Practical Completion Date may still take place with minor incomplete Works, provided that the incomplete Works can be completed or remedied without causing the Homeowner major inconvenience.

It is the Homeowner’s responsibility to notify Magenta when the Practical Completion Date occurs. Notification must occur within ten (10) Working Days of the Practical Completion Date.  The Guarantee will expire on this Completion Date. When notifying Magenta of the Practical Completion Date of the Works, include:

(a)          Homeowner’s name;

(b)          Guarantee Number (found on guarantee certificate);

(c)          Address of Property; and

(d)          Date of Practical Completion Date.

In the absence of notification of the Practical Completion Date within 40 Working Days after the Estimated Completion Date, the Practical Completion Date is deemed to have occurred on the Estimated Completion Date.

The Homeowner must notify Magenta if the Works are significantly delayed and will not be completed by the Estimated Completion Date. The Homeowner should inform Magenta of any new Estimated Completion Date (if provided by the Franchisee).  If the Homeowner notifies Magenta of significant delays in the completion of the Works, Magenta will not deem the Practical Completion Date to have occurred on the Estimated Completion Date.

10. General Terms and Conditions


The Franchisee is not an agent of Magenta for any matter relating to this Guarantee. Magenta will not be liable for any statement, claim or representation made by a Franchisee.

Assessing a claim

(a)          Magenta may need access to the Homeowner’s Property to evaluate the Works, when assessing a claim. The Homeowner shall provide Magenta with all necessary information to assess a claim under the Guarantee. The Homeowner may need to provide thefollowing:

(i)            Works Contract; and

(ii)          Proof of payments made under the Works Contract.

(b)          Magenta may decline the Homeowners claim if they do not provide the necessary information or give Magenta access to the Property, which restricts Magenta’s ability to assess the claim.

Cancellation of the Works Contract

(a)          The Homeowner must get Magenta’s consent to terminate the Works Contract with a Franchisee, otherwise the Guarantee will be cancelled.

(b)          If the Franchisee terminates the Works Contract as a result of the liquidation of the Franchisee, Magenta will answer for any amount paid to the Franchisee for Works that have not been completed (up to the maximum cover of $50,000 or 20% of the Contract Price, whichever is lesser). The process for making a claim isset out in clause 8.

(c)           If the Franchisee terminates the Works Contract for any other reason, then Magenta will not be liable for any debt or obligations of the Franchisee.

Cancellation of the Guarantee

(a)          Without prejudice to any other right or remedy Magenta may have, whether under these Terms and Conditions, under statute or otherwise, Magenta may immediately terminate the Guarantee by written notice to the Homeowner if the Homeowner is in breach of any part of these Terms and Conditions and such breach is not remedied within ten (10) Working Days of notifying the Homeowner.

(b)          If the Guarantee is cancelled then Magenta will not be liable for any claims that arise out of this Guarantee.

Dispute Resolution

(a)          If Magenta declines the Homeowner’s claim or the Homeowner is not happy with the payment received from the claim, the Homeowner may raise a dispute by notice in writing to Magenta. Magenta and the Homeowner agree to use their best efforts to resolve any dispute which may arise under these Terms and Conditions and the Guarantee, through good faith without-prejudice negotiations.

(b)          If Magenta and the Homeowner are unable to resolve the dispute within ten (10)Working Days following delivery of the dispute notice, they shall cease discussions for two (2) Working Days before resuming discussions.

(c)           If, after a further discussion period of five (5) Working Days, Magenta and the Homeowner remain unable to reach an agreed outcome, they shall:

(i)            Obtainthe professional opinion of a quantity survey or to decide the value of the claim; or

(ii)          Agree to refer the dispute to arbitration in accordance with the Arbitration Act 1996 and the decision of the arbitrator will be final and binding on Magenta and the Homeowner.

Entire Agreement

The Application together with these Terms and Conditions constitutes the entire agreement (“Agreement”) between the parties and supersedes all prior representations, agreements, statements and understandings, whether verbal or in writing, on the subject matter of this Guarantee.

Force Majeure

Magenta will not be liable for any delay of the Works or cancellation of the Works Contract due to causes beyond the Franchisee’s reasonable control, including anact of God, fire, flood, storm, lightening, earthquake or other disaster, armed conflict, terrorism, labour disputes, government action or intervention, pandemic, epidemic, accident, weather, fluctuations or supply failures for electrical power, heat, light or water, equipment failures, the inability to procure equipment, services, parts or materials, or any other cause outside of the Franchisee’s control.

Indirect or Consequential Loss

Magenta shall not be liable for:

(a)          Any loss or damage resulting from any errors or omissions arising from incorrect or incomplete information provided by the Homeowner, or failure by the Homeowner to provide information, or an oversight or misrepresentation of a Homeowner’s verbal instructions;

(b)          Any indirect or consequential loss of whatever nature; or

(c)           Any loss or damage arising by reason of any delay in the completion of the Works.

Jurisdiction and Law

This Guarantee shall be construed in accordance with and governed by the laws of New Zealand and the Homeowner submits to the non-exclusive jurisdiction of the New Zealand courts in respect of all matters relating to the Guarantee.

Limitation of liability

(a)          Magenta’s aggregate liability to the Homeowner for any and all costs, loss or damage suffered by the Homeowner arising out of this Guarantee, together with any claims made under this Guarantee, shall not exceed $50,000 or 20% of the Contract Price (whichever is lesser).

(b)          Magenta will only be liable for payments for incomplete Works made by the Homeowner to a Franchisee (caused by its liquidation) for the duration of the Works and the Guarantee will expire on the Practical Completion Date.

(d)          Magenta will not be liable for any damage or defect in the Works.


Notices under these Terms and Conditions can be delivered in person or by email to the address in clause 11. Notices will be deemed received:

(a)          If the notice is sent by email, in accordance with section 214 of the Contract and Commercial Law Act 2017 (Receipt of Electronic Communications); or

(b)          If the notice was posted by mail or delivered by courier, on the day of delivery.


Magenta shall abide by the Privacy Act 2020 and shall take all practical steps to achieve privacy protection.


(a)          The Homeowner will pay the Guarantee Fee into the bank account specified on the Application form.

(b)          Magenta will pay the Homeowner the amount as arising out of this Guarantee (in accordance with the calculation process in clause 8) within 10 Working Days after the Homeowner receives acceptance of their claim.


If any provision of these Terms and Conditions is held invalid, unenforceable, or illegal for any reason, the Terms and Conditions shall remain otherwise in full force and effect apart from such provision.

Term of the Guarantee

The Guarantee shall begin on the Commencement Date and shall expire upon the Practical Completion Date, unless cancelled earlier by Magenta or the Homeowner.


No right or obligation under these Terms and Conditions shall be deemed to be waived except by notice in writing signed by each party.


(a)          This Guarantee shall not be assigned or transferred to a new Homeowner, unless agreed in writing by Magenta (a transfer fee may be payable).

(b)          Currency amounts are in New Zealand dollars unless otherwise stated, and all communications between the parties must be in English.

(c)           Nothing in these Terms and Conditions or Guarantee shall be construed as evidence of a partnership, joint venture, agency or fiduciary relationship between Magenta and the Homeowner.

(d)          If there is a conflict between the Application form and any provisions of theseTerms and Conditions, the Terms and Conditions shall take precedence.

11. Contact us

If you have any questions about the Guarantee or these Terms and Conditions, please feel free to contact us:

·               0800 624 368

·               PO Box 37941, Parnell, Auckland 1151

·               info@magentacover.com

12. Definitions

In these Terms and Conditions, the following meanings apply:

Agreement means the Application together with the Terms and Conditions;

Application means the Application form attached to these Terms and Conditions or made available by a Franchisee;

Claim Form means the form supplied by us or made available to Homeowners;

Commencement Date means (for each Works Contract) the date the Homeowner receives the receipt from Magenta confirming payment of the Guarantee Fee;

Contract Price means the price (including GST) stated in the Homeowner’s Works Contract for the Works to be carried out by a Franchisee;

Estimated Completion Date means the expected completion date provided in the Works Contract by the applicable Franchisee;

Franchisee means the franchisee named in the Works Contract;

Guarantee means the Magenta Guarantee provided in this document;

Guarantee Fee means the cost of the Guarantee payable by the Homeowner and as listed in this Agreement or otherwise notified by Magenta;

Guarantee Number means the unique identifier recorded on the Guarantee certificate issued by Magenta;

Homeowner means the person, or entity, which has requested the Works to be carried out under the Works Contract and named in the Application.

Practical Completion Date has the meaning described in Clause 9;

Property means the land and building to which the Works relate, at the location listed in the Works Contract;

Terms and Conditions means the conditions set out in this document;

Us, our and Magenta means Magenta Limited;

Waiver Form means the form we supply or make available, to record a Homeowner's decision to opt out of the Guarantee;

Works means the services to be provided by a Franchisee as expressly recorded in the Works Contract and may include concept and feasibility services, working drawings and costing services, or building works;

Works Contract means the written and signed contract for Works entered into with a Franchisee and includes details, plans and/or specifications of the Works to be provided by the Franchisee; and

Working Days means days other than Saturday, Sunday, public holidays, or days from 23 December – 6 January (inclusive).