In a May 2025 judgment, the High Court denied urgent relief to a contractor who was therefore unsuccessful in stopping the enforcement of a performance guarantee.
Two consortium members, operating together, were contracted to provide services on a windfarm project. According to the terms of the consortium agreement, the consortium member (A) assumed 29% of
The Western Cape High Court held that the principal debtor (in this case the contractor under a building contract) can apply to court to rectify a guarantee between the guarantor (an insurer) and the beneficiary under the guarantee (the employer) where the contractor had given a counter indemnity to the insurer.
A guarantee contract is
Where an insurer provided a performance bond/guarantee in which it undertook to pay ‘on receipt of a written notice from the seller’ saying that the purchaser had defaulted, it was held that extinctive prescription only started to run when demand for payment was made even though three years had passed since the default event.
The
The guarantor in Raubex Construction (Pty) Ltd v Bryte Insurance Company alleged that payment under a guarantee was not due because of fraud on the part of the beneficiary. A mere error, misunderstanding or oversight, however unreasonable, does not amount to fraud and is insufficient to show that the contentions of the beneficiary are deliberately
Where a retention guarantee was provided to a construction company for an amount to be demanded but not exceeding ‘a good faith estimate of the costs’ claimed, the contractor had to show that the demand was made in the honest belief that it was a correct estimate of what it was entitled to be paid
In resolving the question whether a guarantee was a call guarantee or a conditional guarantee the Supreme Court of Appeal in Mutual & Federal v KNS Construction restated what has been said before about interpreting documents.
The interpretative process is one of ascertaining the intention of the parties – what they meant to achieve. And
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
A surety does not usually operate a business providing security at a price nicely determined according to the assessed likelihood of the risk occurring. That is what insurers do.
Fusion Underwriting Guarantees Agency provided suretyships, called guarantees, as performance guarantees to contractors performing work on behalf of employer municipalities. Before doing so Fusion required a
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