PERFORMANCE BONDS AND GUARANTEES: CONSTRUCTION OWNERS AND PROFESSIONALS BEWARE
Performance bonds and guarantees have been the subject of considerable litigation in recent years in not only the United Kingdom but also some other common law jurisdictions. The aim of this research is to identify the issues most commonly in dispute and the legal principles governing their resolution. Possession of knowledge of the issues and principle should alert the construction and engineering industries and their legal advisers to the matters that need serious attention in the drafting and negotiation of these instruments. Clarity in the legal principles should also contribute to a reduction in litigation. The issues identified include whether an instrument is a conditional or an on-demand bond, the effect of failure on the part of the beneficiary to give notices, availability of an injunction to restrain the surety from paying after a call has been made by the beneficiary, availability of an injunction to restrain a beneficiary from receiving payment after a demand has been made, availability of an injunction to restrain a beneficiary from making claim, availability of a Mareva injunction to freeze the fruits of a call, meanings of certain phrases used in the instruments, and a duty to account for proceeds of a call. The principles governing their resolution were also identified. Particular attention must be paid to any ambiguity whether a surety is liable is always construed in the surety's favor, and prejudicial conduct by the beneficiary releases the surety unless the instrument provides expressly to the contrary.
Performance bond and an injunction
Claims under performance bonds have been a subject of considerable litigation in Malaysia and other jurisdictions. Performance bonds, either conditional or on-demand, are provided by contractors in favour of employers to ensure their complete performance of the contracts. When the contracrors breach the contracts, this will entitle the employers to make calls on the bonds. However, injunctions have been used by contractors to defeat the main purpose of the bonds. Injunction is an equitable remedy and is within the dsicetionary power to the judge. Judges have granted and rejected contractors applications for injunction to restrain the call on the bonds. The main issue is relating the principles used by judges in granting or rejecting an injunction. The objective of the study is to identify legal principles used by the courts in granting or rejecting an application for injunction against bondsmen from making payment or against employer from receiving the the bonds. The research methodology used in achieving this objective, was by analysis of reported and unreported court decisions of the relevant leading cases in Malaysia and other commonwealth countries. The analysis showed that: there three principles in refusing and two principles in granting an application for an injunction. The two principles for granting an injunction are fraud or unconscionably conducts regarding the making of the call or payment. The three principles for refusing are one, when there are serious issues to be tried; two, when fraud is involved; and here, when there is unconscionably conduct by contractors. However, if the court identified that there is an adequate remedy the injunction will not be granted. As conclusion, injunction to restrain the calling and obstructing the payment is not an appropriate method in solving disputes that arise between two parties. It is better to identify other alternative adequate remedies recovering the financial loss and damages.
Evangelical Law Firms and the Translation of Arguments: A study of the Evangelical Movement s Influence through National and International Courts
................................................................................................VII Acknowledgements......................................................................................IX Abbreviations............................................................................................XI Central Legal Terms .................................................................................XII