Injunctions Restraining Calls on Performance Bonds - is Fraud the Only Ground in Singapore?
Lloyd's Maritime and Commercial Law Quarterly, Part 3, August 2000
Posted: 1 Feb 2001
This paper traces the divergence of Singapore law from English law with regard to the grounds upon which a call on a performance bond can be restrained, in particular the recent recognition of the Singapore Court of Appeal's ruling that "unconscionability" is a separate ground to restrain the call of a performance bond. This article examines the legal nature of an on demand performance bond and seeks to challenge the assumption that a performance bond is a mirror image of a letter of credit. This paper also discusses the recent case of Cargill International v. Bangladesh Sugar and Food Industries Corp. The paper will also seek to investigate the ambit of the notion of "unconscionability" and the general principles that can be drawn from a line of Singapore High Court decisions which presage this landmark ruling.
Keywords: Performance bond, guarantee, on demand, injunctions, international finance
JEL Classification: K20, K22, K29
Suggested Citation: Suggested Citation