Demand guarantees

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This blog was co-authored by Adriaan Lourens, Candidate Attorney.

In July 2025, the high court again confirmed the well-established principle that demand guarantees are independent of the underlying contract. A guarantor must pay upon receipt of a valid demand, even if disputes exist between the parties to the underlying agreement. This obligation can only be…

There are only two grounds on which a bank that issues an on-demand guarantee can refuse to pay the amounts guaranteed, namely fraud or if the demand for payment does not comply with the requirements of the guarantee. Otherwise banks are required to honour the obligations they have assumed in terms of demand guarantees issued…