The Johannesburg High Court was invited to enforce a demand guarantee in the form of a performance bond because allegations relating to fraud had not been adjudicated on and this would be left to a parallel arbitration process.
That is not the correct approach to these matters. The cause of action arose from a guarantee
A performance guarantee relating to a building contract included language stating that it was issued for the ‘due fulfilment’ by a sub-contractor of its obligations. The guarantee also stated that the amount was payable on receipt of a written demand made by the main contractor ‘if (in your opinion and at your sole discretion) the
The guarantor must pay on demand
The appeal court has reaffirmed that an undertaking to make payment on receipt of a first written demand under a guarantee (in this case a construction guarantee) must be honoured by the guarantor as an autonomous obligation without question unless a fraud is being committed on it.
An on-demand