Making Demands on Advance Payment Guarantees and Performance Bonds – the “fraud exception”
- By Karen Gough,
for 39 Essex Street Chambers
The general principle is that subject only to the “fraud exception” claims for payment under Advance Payment Guarantees (“APGs”) and Performance Guarantees or Bonds (“PGs”) should be met on demand. The Courts have not been kind to those resisting payment, even when the claims are doubtful, potentially dishonest and/or clearly overstated.
The case of R.D. Harbottle (Mercantile) Limited v National Westminster Bank Limited and Others [1977] 1 WLR 752 concerned guarantees by sellers, confirmed by banks, in favour of buyers. The amount secured was payable on the buyers’ demand. The sellers had provided cross indemnities in very wide terms to the banks, enabling the banks [...]
Making Demands on Advance Payment Guarantees and Performance Bonds: The Test to Secure Summary Judgment on a Claim before the English Court
- By Karen Gough,
for 39 Essex Street Chambers
We are in the midst of a world-wide recession. So, in times when contractors’ liquidity and therefore their very survival is more at risk than usual, and employers are more than usually jittery about the ability of contractors to complete works, a recent decision on a claim to enforce an advance payment guarantee and a performance bonds is of particular interest to construction law practitioners.
The case of Enka Insaat ve Sanayi AS v Banco Popolaire Dell’Alto Adige SPA; Enka Insaat ve Sanayi AS v Cassa Di Risparmio Di Bolzano SPA [2009] EWHC 2410 delivered by Mr. Justice Teare on 6 October 2009 in the Commercial Court is just such a decision.
Enka, the Claimant, is a major Tu [...]
